ChipMOS TECHNOLOGIES INC Sponsored ADR Aktie

Greetings, and welcome to the ChipMOS 2026 Results Semiannual Conference Call. [Operator Instructions] I would now like to turn the conference over to Dr. G.S. Shen of ChipMOS Technology Strategy and Investor Relations team to introduce the management team of the company in conference. Dr. Shen, you may begin.

Thank you, operator. Welcome, everyone, to ChipMOS 2026 Results Semiannual Conference Call. Joining us today from the company are Mr. S.J. Cheng, Chairman and President; and Ms. Silvia Su, Vice President of Finance and Accounting Management Center. We are also joined on the call today by Mr. Jesse Huang, Spokesperson and Senior Vice President of Strategy and Investor Relations.

S.J. will chair the meeting and review business highlights from the second quarter 2026 and provide more color on the operating environment. After Silvia's review of the company's key financial results, S.J. will provide our current business outlook. All company executives will then participate in an open Q&A session. Please note, we have posted a presentation on the MOPS and also on the ChipMOS' website, www.chipmos.com, to accompany today's conference call.

Before we begin the prepared comments, we remind you to review our forward-looking statements disclaimer, which is noted as the safe harbor notice on the second page of today's presentation and in the results press release we issued. As a reminder, today's conference call is being recorded, and a replay will be made available later today on the company's website.

At this time, I'd like to now turn the call over to our company's Chairman and President, Mr. S.J. Cheng. Please go ahead, sir.

Thank you, G.S. We appreciate everyone joining our call today. We delivered a strong start to 2026 with a real earnings inflection. Q2 revenue reached its highest level since 2014 as demand continues to exceed capacity. Better pricing, product mix and utilization are now translating demand strength into meaningful operating leverage. This also reflects our continued execution and sustained momentum across our business. Looking ahead, our customer visibility remains strong. Our investments positioned us with the right capacity and in the right markets. Importantly, AI-driven demand continues to outpace available supply. We are well positioned to build on this performance through the balance of the year and focused on building value for shareholders.

In terms of highlights, we achieved a record quarterly high revenue since 2014 with Q2 revenue up over 6.5% compared to Q1 and up 28.7% on a year-over-year basis. Q2 gross margin increased 420 basis points quarter-over-quarter to 18%. This strength was driven by favorable product mix, pricing and utilization. Q2 net earnings were TWD 1.28, which is a new record since Q3 2022, and accumulated net earnings for first half of 2026 were TWD 2.0. 2Q26 net earnings of USD 0.80 per basic ADS compared to 2Q25 net loss of USD 0.47 per basic ADS.

In terms of the details, our overall utilization rate was 72% in Q2. The assembly UT was up to 78% and the average test utilization was 74% in Q2. Regarding DDIC was 69% and bumping was 65%. Regarding our manufacturing business, assembly represented just over 31.8% of Q2 revenue. Mixed signal and memory testing represented about 25.4% and wafer bumping represented about 23.7% of Q2 revenue. On a product basis, DDIC represented just 18.1% of total revenue in Q2, with gold bumping representing about 21% of Q2 revenue. Revenue from DRAM and SRAM together represented over 21.5% of Q2 revenue. Our mixed signal products represented just under 9.8% of Q2 revenue.

As additional color, our memory products represented 51% of Q2 revenue. Memory product revenue increased approximately 6.7% compared to Q1 and increased more than 46% on a year-over-year basis. DRAM represented about 20.7% of Q2 revenue and increased about 1.3% compared to Q1. This was up more than 70% on a year-over-year basis. Niche DRAM increased 21.8% compared to Q1. Flash revenue represented about 29.5% of Q2 revenue, which was up about 9.9% compared to Q1. Flash revenue was up more than 32% on a year-over-year basis. NAND Flash represented about 34.6% of our Q2 Flash revenue. This is up 6.3% compared to Q1 and up 15.9% on a year-over-year basis. NOR Flash increased 15.8% compared to Q1 and increased over 43% on a year-over-year basis.

To reflect the material cost increase in Q2, we selectively raised the memory OSAT price. Our conversations with customers have been positive. We are a long-term partner and build long-term strategic relationships. We are not interested in trying to take advantage of customers when they need our support even more.

Moving on to Driver IC and Gold Bump revenue. We benefited from some rush orders and a favorable product mix for auto panel and OLED, which offset some industry-wide pockets of soft end market demand. This segment represented about 39.2% of Q2 revenue, which was up about 7.1% compared to Q1 and up about 14.1% on a year-over-year basis. Gold Bump revenue was up about 4.9% compared to Q1 and was up over 29% on a year-over-year basis. Our DDIC revenue was up 9.7% compared to Q1. Demand related to auto panels contributed more than 39% of our Q2 DDIC revenue, which increased over 8.2% compared to Q1 and was up about 23% on a year-over-year basis.

For OLED, we saw positive growth led by customers' inventory replenishments. OLED represented just under 21.9% of our Q2 DDIC revenue, and it was up 12.7% compared to Q1. For operation cost relief of DDIC product, the OSAT price hike in Q2. On an end market basis, total revenue from automotive and industrial represented just under 28.9% of Q2 revenue. This was about 14.1% higher than Q1, was up over 45% on a year-over-year basis. Smartphone revenue represented about 29.9% of Q2 revenue and was up about 2.8% compared to Q1. TV panel demand represented just over 12.6% of Q2 revenue, which was up 7.6% compared to Q1. Consumer represented just over 22.2% of Q2 revenue, which was up about 12.2% compared to Q1. Computing represented 6.4% of Q2 revenue, which represents a decrease of 23.7% compared to Q1.

Now let me turn the call to Ms. Silvia Su to review the second quarter 2026 financial results. Silvia, please go ahead.

Thank you, S.J. All dollar amounts cited in our presentation are in NT dollars. The following numbers are based on the exchange rates of TWD 31.85 against USD 1 as of June 30, 2026. All the figures were prepared in accordance with Taiwan International Financial Reporting Standards. Referencing presentation, Page 12, consolidated operating results summary. For the second quarter of 2026, total revenue was TWD 7,383 million. Net profit attributable to the company was TWD 892 million in Q2. Net earnings for the second quarter of 2026 were TWD 1.28 per basic common share or USD 0.80 per basic ADS. Return on equity in Q2 was 14.4%.

Referencing presentation, Page 13, consolidated statements of comprehensive income. Compared to Q1 2026, total Q2 2026 revenue increased 6.5% compared to Q1 2026. Q2 2026 gross profit was TWD 1,326 million, with gross margin at 18.0% compared to 13.8% in Q1 2026. This represents an increase of 4.2 ppts. Our operating expenses in Q2 2026 were TWD 487 million or 6.6% of total revenue, which increased 7.7% compared to Q1 2026. Operating profit for Q2 2026 was TWD 948 million, with operating profit margin at 12.8%, which is about a 5.3 ppts increase compared to Q1 2026. Net nonoperating income in Q2 2026 was TWD 79 million, which increased 0.5% compared to Q1 2026.

Profit attributable to the company in Q2 2026 increased 76.6% compared to Q1 2026. The difference is mainly due to an increase of operating profit of TWD 428 million and partially offset by the increase of income tax expense of TWD 42 million. Basic weighted average outstanding shares were 700 million shares. Compared to Q2 2025, total revenue for Q2 2026 increased 28.7% compared to Q2 2025. Gross margin at 18.0% increased 11.4 ppts compared to Q2 2025. Operating expenses increased 14.7% compared to Q2 2025. Operating profit margin at 12.8% increased 12.4 ppts compared to Q2 2025.

Net nonoperating income in Q2 2026 was TWD 79 million, compared to net nonoperating expense in Q2 2025 was TWD 682 million. The difference is mainly due to the decrease of foreign exchange loss of TWD 685 million and the positive impact on valuation of financial assets at fair value through profit or loss of TWD 80 million, from the loss on valuation of financial assets at fair value through profit or loss of TWD 2 million in Q2 2025 to gain on valuation of financial assets at fair value through profit or loss of TWD 78 million in Q2 2026.

Profit attributable to the company in Q2 2026 was TWD 892 million compared to loss attributable to the company in Q2 2025 was TWD 533 million. The difference is mainly due to an increase of operating profit of TWD 927 million, net nonoperating income of TWD 761 million, which was partially offset by the income tax change of TWD 263 million from the income tax benefit of TWD 128 million in Q2 2025 to income tax expense of TWD 135 million in Q2 2026.

Referencing presentation, Page 14, consolidated statements of financial position and key indices. Total assets at the end of Q2 2026 were TWD 46,964 million. Total liabilities at the end of Q2 2026 were TWD 22,114 million. Total equity at the end of Q2 2026 was TWD 24,850 million. Accounts receivable turnover days in Q2 2026 were 85 days. Inventory turnover days was 70 days in Q2 2026.

Referencing presentation, Page 15, consolidated statements of cash flows. As of June 30, 2026, our balance of cash and cash equivalents was TWD 12,552 million, which represents a decrease of TWD 2,307 million compared to the beginning of the year. Net free cash inflow for the first half of 2026 was TWD 736 million compared to TWD 1,667 million for the same period in 2025. The difference is mainly due to the TWD 1,757 million increase of CapEx and the change in income tax from a benefit of TWD 106 million in the first half of 2025 to an expense of TWD 229 million in the first half of 2026. This also reflects the TWD 125 million decrease of depreciation expenses, which was partially offset by the increase of operating profit of TWD 1,331 million.

Free cash flow was calculated by adding depreciation, amortization, interest income together with operating profit, and then subtracting CapEx, interest expense, income tax expense and dividend from the sum.

Referencing presentation, Page 16, capital expenditures and depreciation. We invested TWD 2,380 million in CapEx in Q2. The breakdown of CapEx in Q2 was 12.1% for bumping, 14.3% for LCD driver, 30.5% for assembly and 43.1% for testing. Depreciation expenses were TWD 1,218 million in Q2. As of July 31, 2026, the company's outstanding ADS number was approximately 3.7 million units, which represents around 10.4% of the company's issued common shares.

That concludes the financial review. I will now turn the call back to our Chairman, Mr. S.J. Cheng, for our outlook. Please go ahead, sir.

Thank you, Silvia. Looking ahead, the industry remains in a period of record growth. Our performance in the second half of 2026 is expected to remain strong, led by increased customer visibility, stable pricing and a favorable mix with DRAM leading, and DDIC rush orders.

Adding to our confidence, solid memory products momentum growth driven by customers' restocking is expected to help improve related UT levels of assembly and test. The momentum for memory is expected to be better than DDIC products. DRAM products will see more significant growth in the third quarter, driven by strong demand for DDR4 and the ramp-up of DDR5 products. While Flash products are affected by some customers' inventory adjustments, their momentum remains steady for the seasonal stocking, though slightly trailing DRAM.

In our DDIC product business, the momentum is expected to further improve in the second half, thanks to seasonal demand for OLED products, automotive panels and rush orders. In logic and mixed signal products, we plan to extend our product portfolio from TV SoC chips into mobile and AI ASIC-related fields to increase our future business growth momentum. Several mobile-related projects are ongoing with new high-end testing equipment arriving at the end of this year for production. We will expand capacity based on further customer demand and aim to broaden our scope to AI ASIC products to enhance our long-term growth and profitability for the mixed signal line.

To expand our business scope and enhance our growth momentum, we are also integrating and leveraging our wafer bumping, including copper pillar and gold bumping capacity with assembly technologies. This gives us a strong position as we focus on opportunities in the silicon photonics supply chain as a new long-term business growth driver.

The Board approved our increased 2026 CapEx plan today. This includes additional capacity expansion for memory assembly and testing bottleneck stations, continued investments in automation and AI across our operations. This also includes strategic investment to expand testing capacity for developing promising longer-term opportunities in silicon photonics and AI-related ASICs. As always, we are prudent with our CapEx and prioritize investing in high-return customer growth opportunities. Regarding the related capital for the expanded investment, we are monetizing the low-end and lower UT level DDIC assets and applying for the government's Invest Taiwan project for the investment budget subsidy to reduce the cost of capital and support upcoming new product projects.

To meet memory customers' capacity needs starting in 2027 and mixed signal customers' strategic capacity investment and expansion for new product projects, we also recently acquired a new facility in the Tainan Science Park area. We are not only building up memory testing capacity to establish turnkey assembly and testing capabilities in our recently acquired new facility at Tainan site, but also consolidating the clean room space and optimizing logistics efficiency to meet future business growth demand for the next 3 to 5 years.

Furthermore, we continue to optimize our product mix, control operating costs and improve product quality to enhance profitability and maintain our competitive advantage and growth momentum. Operator, that concludes our formal remarks. We can now take questions.

Our first question comes from Jerry Su from UBS.

Chairman and President, congratulations on the strong profit performance this quarter. I would first like to ask about the CapEx. You mentioned that the Board of Directors approved an upward adjustment today. How should we estimate the magnitude of this adjustment for the total annual amount? Also, you mentioned introducing logic testing for mobile phones or AI ASIC. What percentage of this year's CapEx will be invested in this segment? Additionally, do you have any preliminary thoughts regarding next year's CapEx?

Regarding this year's CapEx, as I mentioned, the Board adjusted it upward today. While we usually aim to control CapEx relative to annual revenue at about 20%, it will be higher this year, likely exceeding 25% of our revenue. As for the proportion for logic and mixed signal products, it will account for approximately 7% to 10% of our total CapEx for the full year 2026.

I see. Do you have any preliminary thoughts on next year's CapEx?

Next year's CapEx should also remain relatively high because we are investing to support growth. Therefore, it will likely exceed 25% of revenue again. While we hope to control it below 20% in the long term, for both this year and next, it will likely be above 25%.

You mentioned that logic and mixed signal account for about 7% to 10% of CapEx this year. I wonder if that proportion will increase next year as 7% to 10% feels like it only covers a few testing machines. If you are entering this market, the proportion for logic should see a more significant increase next year.

The proportion for next year should indeed be higher than this year's, though we still need to organize the specific weighting for the memory segment. Overall, however, the proportion will be higher.

One more question for the Chairman. You mentioned price adjustments for memory and Driver IC packaging/testing in the second quarter. Is there room for further upward adjustments for these 2 product lines in the second half of the year?

As everyone knows, material costs, including substrates, lead frames and gold, are rising, especially for gold. We will pass these price increases on to our customers. Secondly, for high-end probe cards in the Driver IC segment, the price increases have been quite substantial. We have reached agreements with customers to pass these costs through to maintain our competitive advantage.

And I am not showing any further questions in the queue. I would like to turn the call back over to G.S. Shen.

That concludes our question-and-answer session. Thank you for participating. I'll turn the floor back to Mr. S.J. Cheng for any closing comments.

Thank you, everyone, for joining our conference call. Please e-mail our IR team if you have any more questions. We appreciate your support. Goodbye.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

Greetings, and welcome to the ChipMOS Fourth Quarter and Full Year 2025 Results Conference Call. [Operator Instructions]

I would now like to turn the conference over to Dr. G.S. Shen of ChipMOS Technologies' Strategy and Investor Relations team to introduce the management team of the company in conference. Dr. Shen, you may begin.

Thank you, operator. Welcome, everyone, to ChipMOS Fourth Quarter and Full Year 2025 Results Conference Call.

Joining us today from the company are Mr. S.J. Cheng, Chairman and President; and Ms. Silvia Su, Vice President of Finance and Accounting Management Center. We are also joined on the call today by Mr. Jesse Huang, Spokesperson and Senior Vice President of Strategy and Investor Relations. S.J. will chair the meeting and review business highlights and provide more color on the operating environment. After Silvia's review of the company's key financial results, S.J. will provide our current business outlook. All company executives will then participate in an open Q&A session.

Please note, we have posted a presentation on the MOPS and also on the ChipMOS website, www.chipmos.com, to accompany today's conference call.

Before we begin the prepared comments, we remind you to review our forward-looking statements disclaimer, which is noted as the safe harbor notice on the second page of today's presentation and in the results press release we issued. As a reminder, today's conference call is being recorded, and a replay will be made available later today on the company's website.

At this time, I'd like to now turn the call over to our company's Chairman and President, Mr. S.J. Cheng. Please go ahead, sir.

Thank you, G.S. We appreciate everyone joining our call today. We delivered strong fourth quarter results driven by improving demand for high-value memory solutions, particularly in data center and AI-related applications. This sustained strong demand more than offset continued softness in certain consumer end markets. Both the quarter and full year 2025 results reflect a better mix and ongoing pricing discipline, which supports our revenue momentum and expanding profitability.

We continue to execute from a position of technology and scale leadership while maintaining a highly disciplined approach to capital spending. We are prioritizing critical growth programs and customer commitments while protecting the strength of our balance sheet. Our focus remains clear: deepen strategic customer relationships, gain share in structurally growing markets, expand margins and build durable long-term shareholder value.

In terms of highlights. We achieved a record quarterly high revenue since Q3 2022 with Q4 revenue up over 6% compared to Q3 and up nearly 21% on a year-over-year basis. 2025 annual revenue increased 5.5% compared to 2024. Q4 gross margin increased 190 basis points quarter-over-quarter to 14.3%. This strength was driven by favorable product mix and assembly UT level. Q4 net earnings were TWD 0.72 and with accumulated net earnings for 2025 were TWD 0.70.

In terms of the details, our overall utilization rate was 65% in Q4 with an improvement in memory products led by strong demand in support of AI, computing and data centers. The assembly UT was up to 75% and the average test utilization was 65% in Q4.

Regarding DDIC was 60% and bumping was 53%. We are in a period of unprecedented growth and expect this to continue through 2026 based on visibility we have with our customers. Comments from across the broader semiconductor industry this earnings season show confidence going even further out.

Regarding our manufacturing business, assembly represented just over 31% of Q4 revenue led by strength in our memory products. Mixed signal and memory testing represented about 24% and wafer bumping represented about 22% of Q4 revenue.

On a product basis, DDIC represented just under 21% of total revenue in Q4, with gold bumping representing about 19% of Q4 revenue. Revenue from DRAM and SRAM together represented over 20% of Q4 revenue. Our mixed signal products represented just under 10% of Q4 revenue.

As additional color, our memory products represented just under 50% of Q4 revenue. Memory product revenue increased approximately 8% compared to Q3 and increased more than 55% on a year-over-year basis. Total memory product revenue in 2025 increased 26.6% compared to 2024. We benefited from pricing and volume and our position with leading customers.

DRAM represented about 20% of Q4 revenue and significantly increased about 20% compared to Q3. DRAM revenue in 2025 also significantly increased 24% compared to 2024. Niche DRAM and commodity DRAM increased 11.6% and more than 50% compared to Q3, respectively.

Flash revenue represented about 29% of Q4 revenue, which was slightly up about 1.6% compared to Q3 and was up more than 46% on a year-over-year basis. Flash revenue in 2025 significantly increased over 28% compared to 2024.

NAND Flash represented about 36% of our Q4 flash revenue. This is down 3.8% compared to Q3, but significantly up over 70% on a year-over-year basis. NAND flash revenue in 2025 significantly increased about 38% compared to 2024.

NOR Flash increased 2.3% compared to Q3 and increased over 34% on a year-over-year basis. NOR Flash revenue in 2025 increased about 27% compared to 2024.

Moving on to Driver IC and Gold Bump revenue. We benefited from a favorable product mix for auto panel and OLED, which offset some industry-wide pockets of soft end market demand. We are still in the early stages of an auto recovery, but we are starting to see some encouraging signs. This segment represented about 40% of Q4 revenue, which was up about 2.6% compared to Q3, but down about 5% on a year-over-year basis.

Gold bump revenue was up about 4% compared to Q3 and was up over 19% on a year-over-year basis. Our DDIC revenue was slightly up 1.2% compared to Q3. Demand related to auto panels contributed more than 41% of our Q4 DDIC revenue, which increased over 12% compared to Q3 and was up about 10% on a year-over-year basis.

For OLED, we saw positive growth led by customers' inventory replenishments. OLED represented just under 25% of our Q4 DDIC revenue, and it was up over 8% compared to Q3. On an end market basis, total revenue from automotive and industrial represented just under 27% of Q4 revenue. This was about 13.4% higher than Q3, was up over 27% on a year-over-year basis and increased about 16% in 2025 compared to 2024.

Smartphone revenue represented about 32% of Q4 revenue and was down about 5% compared to Q3. TV panel demand represented just over 12% of Q4 revenue, which was up 7.2% compared to Q3. Consumer represented just over 21% of Q4 revenue, which was up about 8% compared to Q3. Driven by strong customer demand and new products released to production, computing represented 7.5% of Q4 revenue, which represents a significant increase of 26% compared to Q3 and full year growth of over 57% compared to 2024.

Now let me turn the call to Ms. Silvia Su to review the fourth quarter and full year 2025 financial results. Silvia, please go ahead.

Thank you, S.J. All dollar amounts cited in our presentation are in NT dollars. The following numbers are based on the exchange rates of TWD 31.37 against USD 1 as of December 31, 2025. All the figures were prepared in accordance with Taiwan International Financial Reporting Standards.

Referencing presentation, Page 12, consolidated operating results summary. For the fourth quarter of 2025, total revenue was TWD 6,521 million. Net profit attributable to the company was TWD 500 million in Q4. Net earnings for the fourth quarter of 2025 were TWD 0.72 per basic common share or USD 0.46 per basic ADS. Return on equity in Q4 at 8.4%.

Referencing presentation, Page 13, consolidated statements of comprehensive income. Compared to Q3 2025, total Q4 2025 revenue increased 6.1% compared to Q3 2025. Q4 2025 gross profit was TWD 936 million, with gross margin at 14.3% compared to 12.4% in Q3 2025. This represents an increase of 1.9 ppts. Our operating expenses in Q4 2025 were TWD 443 million or 6.8% of total revenue, which increased 7.9% compared to Q3 2025.

Operating profit for Q4 2025 was TWD 636 million, with operating profit margin at 9.7%, which is about a 3.7 ppts increase compared to Q3 2025. Net nonoperating expenses in Q4 2025 was TWD 24 million compared to net nonoperating income in Q3 2025 was TWD 69 million. The difference is mainly due to the increase of share of loss of associates accounted for using equity method of TWD 99 million.

Profit attributable to the company in Q4 2025 increased 41.9% compared to Q3 2025. The difference was mainly due to the increase of operating profit of TWD 266 million and partially offset by the increase of net nonoperating expenses of TWD 93 million and the increase of income tax expense of TWD 26 million.

Basic weighted average outstanding shares were 698 million shares. Compared to Q4 2024, total revenue for Q4 2025 increased 20.8% compared to Q4 2024. Gross margin at 14.3% increased 4.8 ppts compared to Q4 2024. Operating expenses increased 2.6% compared to Q4 2024. Operating profit margin at 9.7% increased 7.5 ppts compared to Q4 2024.

Net nonoperating expenses in Q4 2025 was TWD 24 million compared to net nonoperating income in Q4 2024 was TWD 155 million. The difference is mainly due to the increase of share of loss of associates accounted for using equity method of TWD 110 million, the decrease of foreign exchange gains of TWD 53 million and the increase of interest expense of TWD 11 million.

Profit attributable to the company increased 115.2% compared to Q4 2024. The difference is mainly due to an increased operating profit of TWD 519 million and partially offset by the increase of net nonoperating expenses of TWD 179 million and increase of income tax expense of TWD 73 million.

Referencing presentation, Page 14, consolidated statements of comprehensive income. Compared to last year, total revenue for 2025 was TWD 23,933 million, which increased 5.5% compared to 2024. Gross margin at 10.8% decreased 2.2 ppts compared to 2024. Our operating expenses in 2025 were TWD 1,689 million, which decreased 4.6% compared to 2024.

Operating profit margin in 2025 was 4.8%, a decrease of 0.8 ppts compared to 2024. Net nonoperating expenses in 2025 was TWD 555 million compared to net nonoperating income in 2024 was TWD 373 million. The difference is mainly due to the adverse impact on the foreign exchange of TWD 703 million from the foreign exchange gains of TWD 243 million in 2024 to the foreign exchange losses of TWD 460 million in 2025. The adverse impact on share of associates accounted for using equity method of TWD 146 million from share of profit of associates accounted for using equity method of TWD 3 million in 2024 to share of loss of associates accounted for using equity method of TWD 143 million in 2025 and the gain on disposal of noncurrent assets held for sale of TWD 72 million in 2024.

Net profit in 2025 was TWD 495 million, which decreased 65.1% compared to 2024. The difference due to the increase of net nonoperating expenses of TWD 928 million, the decrease of operating profit of TWD 131 million and partially offset by the decrease of income tax expense of TWD 135 million. Net earnings for the full year 2025 were TWD 0.70 per basic common share compared to TWD 1.95 per basic common share for the full year 2024.

Referencing presentation, Page 15, consolidated statements of financial position and key indices. Total assets at the end of Q4 2025 were TWD 45,352 million. Total liabilities at the end of Q4 2025 were TWD 21,344 million. Total equity at the end of Q4 2025 was TWD 24,008 million. Accounts receivable turnover days in Q4 2025 were 85 days. Inventory turnover days was 54 days in Q4 2025.

Referencing presentation, Page 16, consolidated statements of cash flows. As of December 31, 2025, our balance of cash and cash equivalents was TWD 14,859 million, which represents a decrease of TWD 360 million compared to the beginning of the year.

Net free cash inflow for the full year 2025 was TWD 1,555 million compared to net free cash outflow of TWD 938 million for the full year 2024. The difference was mainly due to a reduction in CapEx of TWD 1,785 million, a cash dividend paid of TWD 436 million and the increase of depreciation expenses of TWD 245 million. We continue to balance our capital allocation strategy by investing in the long-term capacity and revenue generation areas that will drive our success while returning value to shareholders through the distribution of dividends.

Free cash flow was calculated by adding depreciation, amortization, interest income together with operating profit and then subtracting CapEx, interest expense, income tax expense and dividend from the sum.

Referencing presentation, Page 17, capital expenditures and depreciation. We invested TWD 1,711 million in CapEx in Q4 and TWD 3,666 million in CapEx in 2025. The breakdown of CapEx in Q4 was 7.7% for bumping, 16.5% for LCD driver, 20.6% for assembly and 55.2% for testing.

Depreciation expenses were TWD 1,244 million in Q4. Depreciation expenses were TWD 5,101 million in 2025. As of January 31, 2026, the company's outstanding ADS number was approximately 3.5 million units, which represents around 9.9% of the company's outstanding common shares.

That concludes the financial review.

I will now turn the call back to our Chairman, Mr. S.J. Cheng, for our outlook. Please go ahead, sir.

Thank you, Silvia. As you can see, both Q4 and the full year 2025 were very strong for ChipMOS. We do not expect this demand to strength to let up given visibility we have with customers, solid memory momentum and positive comments across the semiconductor industry this earnings season.

Our business momentum is expected to remain stable and results is optimistic compared to 2025. As is typical for our business, Q1 can be a little slower with the fewer working days. We expect normal seasonal patterns with the second half coming in stronger than the first half. In the meantime, we will manage our own capacity and work with customers to ensure they are properly supported. Adding to our confidence, solid memory products momentum growth driven by customers' restocking is expected to help improve related UT levels of assembly and test.

DRAM momentum is also expected to maintain solid driven by customers' strong demand for DDR4 and DDR5 release to production. Flash momentum has slightly slowed down, impacted by customer stock adjustments. Therefore, we expect memory momentum will be better than DDIC in Q1 and coming quarters.

Meanwhile, to reflect the continued rise in material costs, especially gold, we plan to increase memory products OSAT price again since Q1 to offset cost increases and maintain profitability.

In our DDIC product business, the momentum is expected to be remained soft in Q1, which is in line with the broader industry. However, automotive panel and wearable product momentum is relatively stable compared to other DDIC products. In addition, regarding mixed signal products, momentum is expected to increase this year, driven by the benefits of product diversification.

Regarding to 2026 CapEx, except memory product bottleneck capacity expansion and automation, we plan to invest in capacity expansion to meet customers' future demand for new products, projects and increased volumes. In the meantime, we will also continue our cost reductions, quality improvement and operating strength actions to further improve profit and maintain business growth momentum and competition advantage. This is a fundamental practice for us that is ongoing and never done.

We continue to execute from a position of technology and scale leadership while maintaining a highly disciplined approach to capital spending. Importantly, we continue to prioritize returning capital to shareholders as part of our overall shareholder-friendly capital allocation plan. I am pleased to report that pending shareholder approval at our May AGM, we will distribute TWD 1.23 per common share by capital surplus.

As I commented at the start of today's call, we are prioritizing critical growth programs and customer commitments while protecting the strength of our balance sheet. Our focus remains clear: deepen strategic customer relationships, gain share in structurally growing markets, expand margins and build durable long-term shareholder value.

Finally, we would like to announce again we have decided to move to semiannual conference calls from quarterly conference calls with the next call to be held for the first 6 months results of 2026. Financial reporting of operation results per regulation will remain reviewed by our accountant quarterly approved by our Board and then published. Although the timing of our calls is changing, we will remain very accessible to investors and analysts. We plan to continue participating in investment forums and conferences and other various investor and analyst meetings to enhance communication with investors and ensure a more complete understanding of our operating environment and financial results.

Operator, that concludes our formal remarks. We can now take questions.

Operator?

Our first question comes from Jerry Su from UBS.

The company mentioned increased memory OSAT prices again in Q1 '26. What percentage will prices increase? Will the price increase be reflected in Q2 '26? And what is the CapEx to sales ratio in 2026 and impact on depreciation?

Price increase are strategic and vary between customers and products. Therefore, it is not appropriate to provide a specific number here. Besides, a couple of customers prefer to consign the key assembly material. Under the current business environment, we would continue to negotiate the cost and price issue with customers.

On the contrary, some smaller customers with smaller lot size could not get the assembly and test priority even with double price, which could adversely impact productivity. As for 2026 CapEx, we still favor adopting the previous Invest Taiwan project budget with lower interest rate.

As for CapEx to sales ratio, it would roughly be between 22%, 27% of 2026 annual revenue. We expect the depreciation in coming quarters will have around a 1%, 3% quarterly increase from our 4Q '25 level. Operator?

The second question comes from Michael Hsu from Yuanta.

Michael Hsu, analyst, Yuanta. Will there be any new customers under this year's CapEx plan for memory, logic and DDIC?

Regarding memory product, we mainly serve current major customers. In order to maintain our productivity and efficiency, we don't provide service for those customers with smaller lot sizes. For the longer term, we continue to develop new customers in logic and mixed signal products segment.

Further, for example, the product application would be from MEMS and TV SoC products to include Mini LED and logic products for smart devices serving high tech and health care. We also invest flip chip assembly capacity in order to meet future edge AI device demand with high-speed/frequency DRAM.

Would you provide the CapEx allocation by product segment?

Memory Test would take around 50% of 2026 CapEx; logic about 10%; DDIC and bumping takes around 25%; and assembly around 20%.

Importantly, some of the CapEx would be protected with 3-year take-or-pay contract. The majority investment in bumping is for the non-DDIC portion, including flip chip and RDL.

And I am not showing any further questions in the queue. I would like to turn the call back over to G.S. Shen.

Thank you. I will read a question from our foreign institutional investors.

The question is about the low-cost bump solution situation. What is different about this from current solutions?

The current bump solution for DDIC is gold bump. It is well known that gold price is much higher than other precious metals, for example, silver, copper, et cetera, and the price keeps rising. Our solution implements silver alloy bump instead of pure gold in the bumping process. The silver alloy bump solution has been qualified both by IC level and panel level reliability tests. Now that performance is qualified, we can provide a very cost-effective bump solution to our customers about 50% to 60% lower who can then get a better competitive cost structure in the DDIC market. Silver alloy bump product is designing in tablet applications and sampling for mobile phones with customers.

That concludes our question-and-answer session. Thank you for participating. I'll turn the floor back to Mr. S.J. Cheng for any closing comments.

Thank you, everyone, for joining our conference call. Please e-mail our IR team if you have any more questions. We appreciate your support. Goodbye. Operator?

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.