ChipMOS Technologies Inc (IMOS) 2017 Q3 法說會逐字稿

Greetings, and welcome to the ChipMOS Third Quarter 2017 Results Conference Call.

大家好，歡迎參加南茂茂茂 2017 年第三季度業績電話會議。

(Operator Instructions) As a reminder, this conference is being recorded.

（操作員指示）謹此提醒，本次會議正在錄製中。

I would now like to turn the conference over to your host, Mr. David Pasquale with Global IR Partners.

現在我想將會議交給主持人、全球投資者關係合作夥伴的 David Pasquale 先生。

Thank you.

謝謝。

You may begin.

你可以開始了。

Thank you, operator.

謝謝你，接線員。

Welcome, everyone, to ChipMOS' Third Quarter 2017 Results Conference Call.

歡迎大家參加茂茂2017年第三季度業績電話會議。

Joining us today from the company are Mr. S.J. Cheng, Chairman and President; and Ms. Silvia Su, Senior Director of Finance and Accounting Management Center.

今天加入我們公司的是 S.J. 先生。程先生，董事長兼總裁；財務會計管理中心高級總監Silvia Su女士。

S.J. will review business highlights from 3Q 2017 and provide color on the operating environment.

S.J.將回顧 2017 年第三季度的業務亮點並提供有關運營環境的信息。

Silvia will then review the company's key financial results.

西爾維婭隨後將審查公司的主要財務業績。

We are also joined on the call today by Mr. Lafair Cho, Senior Executive Vice President and COO and spokesperson; Vice President, Mr. David Wang; and Deputy Director, Mr. G.S. Shen.

高級執行副總裁兼首席運營官兼發言人 Lafair Cho 先生也參加了今天的電話會議；副總裁王大衛先生；副主任沉國勝先生。

All company executives will participate in the Q&A session after management's formal remarks.

在管理層正式發言後，所有公司高管將參加問答環節。

If you have not yet received a copy of today's results release, please email Global IR Partners at imos@globalirpartners.com, or you can get a copy of the release off of ChipMOS' website www.chipmos.com.

如果您尚未收到今天的業績發布副本，請發送電子郵件至全球投資者關係合作夥伴：imos@globalirpartners.com，或者您也可以從 ChipMOS 網站 www.chipmos.com 獲取該發布副本。

As with prior quarters, we hosted a call in Mandarin after the close of the Taiwan Stock Market a few hours ago.

與前幾個季度一樣，我們在台灣股市收盤後幾個小時內用普通話召開了電話會議。

This is part of the company's ongoing efforts to broaden investor and analyst following in the domestic Asian market, given the full Taiwan listing.

鑑於在台灣全面上市，這是該公司不斷努力擴大亞洲國內市場投資者和分析師關注度的一部分。

The prepared comments management will cover here are the same as those covered on the earlier call.

管理層將在此處涵蓋的準備好的評論與之前電話會議中涵蓋的內容相同。

The second call is intended to give the company's English-speaking investors the same opportunity to both hear directly from management and ask questions pertaining to results and the operating environment.

第二次電話會議旨在為該公司的英語投資者提供同樣的機會，既可以直接聽取管理層的意見，也可以提出有關業績和運營環境的問題。

With that said, we must also make a disclaimer regarding forward-looking statements.

話雖如此，我們還必須對前瞻性陳述做出免責聲明。

During this call, management may make forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended; and Section 21E of the U.S. Securities Exchange Act of 1934, as amended.

在本次電話會議中，管理層可能會根據 1933 年美國證券法（經修訂）第 27A 條的規定做出前瞻性陳述；經修訂的 1934 年美國證券交易法第 21E 條。

Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual performance, financial condition or results of operation of the company to be materially different from any future performance, financial condition or results of operations implied by such forward-looking statements.

此類前瞻性陳述涉及已知和未知的風險、不確定性和其他因素，可能導致公司的實際業績、財務狀況或經營業績與此類前瞻性陳述所暗示的任何未來業績、財務狀況或經營業績存在重大差異。前瞻性陳述。

Further information regarding these risks, uncertainties and other factors is included in the company's most recent annual report on Form 20-F, which was filed with the U.S. Securities and Exchange Commission and is in the company's other filings with the SEC.

有關這些風險、不確定性和其他因素的更多信息包含在該公司向美國證券交易委員會提交的最新 20-F 表格年度報告中，以及該公司向美國證券交易委員會提交的其他文件中。

At this time, I would like to now turn the call over to the company's Chairman and President, Mr. S.J. Cheng.

現在，我想將電話轉給公司董事長兼總裁 S.J. 先生。程.

Please go ahead, sir.

請繼續，先生。

Yes.

是的。

Thank you, David.

謝謝你，大衛。

Welcome, everyone, to our third quarter of 2017 conference call.

歡迎大家參加我們的 2017 年第三季度電話會議。

Hopefully, you all had time to review our earnings release.

希望大家有時間查看我們的收益發布。

The third quarter has come in as we expected.

第三季度的情況符合我們的預期。

As we know, a few months ago, we expect some frustration in our revenues due to allocation change at our largest memory customers.

據我們所知，幾個月前，我們預計由於我們最大的內存客戶的分配變化，我們的收入會受到一些挫折。

We continue to manage this relationship closely.

我們將繼續密切管理這種關係。

We do, however, focus our resource on the (inaudible) in our business, several of which are long term but bringing us opportunity.

然而，我們確實將資源集中在我們業務的（聽不清）上，其中一些是長期的，但給我們帶來了機會。

Our efforts are helping us to absorb the low allocation change in our commodity DRAM business.

我們的努力正在幫助我們吸收商品 DRAM 業務中的低配置變化。

As a result, our commodity DRAM revenue was about 8% of the revenue in Q3 compared to 13.1% in Q2.

因此，我們的商品 DRAM 收入約佔第三季度收入的 8%，而第二季度為 13.1%。

As noted on our last call, this change was a strategic decision for ChipMOS.

正如我們上次電話會議中所指出的，這一變化是 ChipMOS 的戰略決策。

We continue to maintain a good relationship with the customer as it -- in-source capability in its own [Tele] facility.

我們繼續與客戶保持良好的關係，因為它擁有自己的 [Tele] 設施的內源能力。

It is still early, but based on the customer feedback, we expected this 1 customer will bottom out in a single digit percentage of the revenue level.

現在還為時過早，但根據客戶的反饋，我們預計這 1 個客戶的收入水平將以個位數百分比觸底。

On the offsetting positive side, we are making good progress on several new DDIC program, with the customer ramped starting in Q3.

從積極的一面來看，我們在幾個新的 DDIC 項目上取得了良好進展，客戶數量從第三季度開始增加。

DDIC demand continued to grow as the 4K2K, UHD and LCD TV panels, et cetera increased.

隨著4K2K、UHD、液晶電視面板等的增長，DDIC需求持續增長。

We are also producing a benefit from increased driver demand from the smartphone market.

我們還從智能手機市場驅動需求的增加中獲益。

Full screen panel and nano for the design require higher COF capacity and gold bumping.

全面屏面板和納米設計需要更高的COF容量和金凸塊。

We continue to work closely in support of our customer in order to act on requirement capacity to meet their higher demand level.

我們繼續密切合作，為客戶提供支持，以便根據需求能力採取行動，以滿足他們更高的需求水平。

Additional color on Q3.

Q3 上的附加顏色。

Flash memory including Mask ROM growth 6.6% compared to second quarter represented 20.1% of our Q3 revenue.

包括 Mask ROM 在內的閃存較第二季度增長 6.6%，占我們第三季度收入的 20.1%。

We are very encouraged by the strong demand of NOR Flash, led by our wafer testing business for NOR Flash.

在我們的 NOR Flash 晶圓測試業務的帶動下，我們對 NOR Flash 的強勁需求感到非常鼓舞。

And as a result, all our NOR Flash testing capacity remains fully utilized.

因此，我們所有的 NOR 閃存測試能力仍然得到充分利用。

Another bright spot was revenue from assembly and testing service of DDIC, which grew 7.1% in Q3 compared to the Q2.

另一個亮點是DDIC的封裝測試服務收入，第三季度環比增長7.1%。

This represent about 28.1% of our Q3 revenue.

這約占我們第三季度收入的 28.1%。

Reflecting macro demand trend, revenue from our driver, large panel [COF] increased 9.7%.

我們的驅動力大面板 [COF] 的收入增長了 9.7%，反映了宏觀需求趨勢。

Our gold bumping business increased 22.6% in Q3 compared to the previous quarter, representing about 18.5% of Q3 revenue.

我們的金凸塊業務第三季度環比增長22.6%，約佔第三季度收入的18.5%。

As I mentioned earlier, 18 by 9 screen for smartphone and narrow bezel or a full screen panel design require higher capacity.

正如我之前提到的，智能手機的 18 x 9 屏幕和窄邊框或全面屏面板設計需要更高的容量。

This model will use more advanced driver solution with fine pitch COF packaging vs conventional COG form factor.

該型號將使用比傳統 COG 外形更先進的驅動器解決方案，採用細間距 COF 封裝。

We start production of this advanced COF solution in Q3.

我們於第三季度開始生產這種先進的 COF 解決方案。

As we look forward into the fourth quarter of 2017, we are expecting the quarter to develop more or less like Q3.

當我們展望 2017 年第四季度時，我們預計該季度的發展或多或少與第三季度相似。

We see many positive (inaudible) but also expect the continued headwind in our commodity DRAM business, from a low allocation headwind.

我們看到了許多積極的因素（聽不清），但也預計我們的商品 DRAM 業務將因低配置逆風而持續面臨阻力。

On the positive side, we expected growth in the Niche DRAM, NOR Flash, DDIC and gold bumping.

從積極的一面來看，我們預計 Niche DRAM、NOR Flash、DDIC 和金凸塊將出現增長。

We continue to see a material uptick in demand on Niche DRAM, NOR Flash, driven by automobile, electronics and consumer product demand.

在汽車、電子和消費產品需求的推動下，我們對 Niche DRAM、NOR Flash 的需求持續增長。

Everything is moving to the [high-end characters], which means higher silicon compound and increase also of demand.

一切都在向[高端角色]發展，這意味著更高的矽化合物和需求的增加。

Based on customer and market effect, demand for NOR Flash and Niche DRAM product remains healthy and is expected to last for a few quarters, led by product upgrading and the new aggregation of mobile device.

基於客戶和市場效應，在產品升級和移動設備新聚合的帶動下，NOR Flash和Niche DRAM產品的需求依然健康，預計將持續幾個季度。

We also expect DDIC demand will continue to improve as we benefit from ongoing 4K2K UHD TV market development, combining with the new model feature introduction and requirement for -- from smartphones, including 18 by 9 with a narrow bezel or full screen panel, OLED and TDDI.

我們還預計 DDIC 需求將繼續改善，因為我們受益於 4K2K 超高清電視市場的持續發展，結合新型號功能的推出和智能手機的要求，包括 18 x 9 窄邊框或全屏面板、OLED 和TDDI。

In addition to increased driver volumes, this trend means longer testing time and require larger testing capacity from us, and also require small 12-inch fine pitch COF capacity.

這種趨勢除了驅動器數量增加之外，還意味著更長的測試時間，需要我們更大的測試能力，同時也需要12英寸細間距COF的小型化能力。

Finally, we continue to work with our partners and now are well positioned in the optical sensor related market.

最後，我們繼續與合作夥伴合作，現在在光學傳感器相關市場中處於有利地位。

This is a developing area.

這是一個發展中的地區。

We are moving forward conservatively.

我們正在保守地前進。

We are past this, however, because we already have some project introductions.

不過，我們已經過去了，因為我們已經有了一些項目介紹。

After gaining initial assessment in Q4, those products will be able to capture growth, market opportunity in 2018.

在第四季度獲得初步評估後，這些產品將能夠在 2018 年抓住增長和市場機會。

With that, let me now turn the call over to Ms. Silvia Su, our Senior Director of Finance and Accounting to review the third quarter financial results.

現在，讓我將電話轉給我們的財務和會計高級總監 Silvia Su 女士，回顧第三季度的財務業績。

Silvia, go ahead.

西爾維婭，繼續吧。

Thank you, S.J. All dollar amounts stated in our presentation are in U.S. dollars.

謝謝你，S.J.我們的演示文稿中所述的所有金額均以美元為單位。

We have provided both U.S. dollars and NT dollars in our press release.

我們在新聞稿中提供了美元和新台幣。

The following numbers are based on the exchange rate of TWD 30.33 against USD 1 as of September 29, 2017.

以下數字基於截至 2017 年 9 月 29 日新台幣 30.33 兌 1 美元的匯率。

Net earnings for the third quarter of 2017 was $0.13 per diluted ADS compared to $0.25 per diluted ADS in Q2.

2017 年第三季度攤薄後美國存託股淨利潤為每股 0.13 美元，而第二季度攤薄後每股美國存託股淨利潤為 0.25 美元。

This represents net income of USD 5.3 million and $0.01 per basic and $0.01 per diluted common share compared to a net income of USD 10.6 million and $0.01 per basic and $0.01 per diluted common share in the second quarter of 2017.

這意味著淨利潤為530 萬美元、每股基本股0.01 美元和每股稀釋普通股0.01 美元，而2017 年第二季度的淨利潤為1060 萬美元、每股基本股0.01 美元和每股稀釋普通股0.01 美元。

Please note there was a USD 2.2 million loss in Q3, which was booked as a reversal of gain on disposal of discontinued operations in connection with the disposal of Tsinghua Shanghai equity interest.

請注意，第三季度出現了 220 萬美元的虧損，該虧損被記作與處置清華上海股權相關的已終止業務處置收益的轉回。

The loss is an accrual, based on the best estimate and may change slightly when finalized in Q4.

該損失是基於最佳估計的應計損失，在第四季度最終確定時可能會略有變化。

Results were also negatively impacted by Taiwan's massive power outage in Q3.

第三季度台灣大規模停電也對業績產生了負面影響。

We have dealt with these issues in the past and got everything up and running as quickly as possible to limit the impact.

我們過去已經處理過這些問題，並儘快讓一切正常運行，以限制影響。

For the first 9 months of 2017, total revenue was USD 446.2 million.

2017 年前 9 個月，總收入為 4.462 億美元。

Net earnings for the first 9 months of 2017 were $2.19 per diluted ADS, with $0.11 per diluted common shares in the same period.

2017 年前 9 個月稀釋後每股美國存託股淨利潤為 2.19 美元，同期稀釋後每股普通股淨利潤為 0.11 美元。

Our operating expenses in Q3 were USD 12.7 million, or 8.7% of our Q3 revenue compared to USD 16.3 million, or 10.5% of our revenue in Q2.

第三季度的運營費用為 1,270 萬美元，佔第三季度收入的 8.7%，而第二季度的運營費用為 1,630 萬美元，佔收入的 10.5%。

Other operating income in Q3 was USD 0.9 million, or net -- and net nonoperating expenses in Q3 was USD 3.8 million.

第三季度其他營業收入為 90 萬美元（淨額），第三季度非營業費用淨額為 380 萬美元。

Income tax expense for Q3 was USD 2 million compared to USD 2.3 million in Q2.

第三季度的所得稅費用為 200 萬美元，而第二季度為 230 萬美元。

On a segment basis, revenue breakdown of third quarter was 26.6% in testing, 27.3% in assembly, 27.2% in LCD driver business and 18.9% in bumping.

從部門來看，第三季度的收入細分為測試業務佔26.6%，組裝業務佔27.3%，LCD驅動器業務佔27.2%，凸塊業務佔18.9%。

Total capacity utilization was 76% for the third quarter of 2017 compared to 77% for the second quarter of 2017.

2017 年第三季度的總產能利用率為 76%，而 2017 年第二季度為 77%。

Our Q3 testing capacity utilization was 75% as compared to 82% of Q2.

我們第三季度的測試產能利用率為 75%，而第二季度為 82%。

Assembly capacity utilization was running at 63% in Q3 as compared to 73% in Q2.

第三季度的裝配產能利用率為 63%，而第二季度為 73%。

LCD driver capacity was running at 87% utilization in Q3 as compared to 87% in Q2.

第三季度 LCD 驅動器產能利用率為 87%，而第二季度為 87%。

And bumping utilization was 77% in Q3 compared to 63% in Q2.

第三季度的利用率為 77%，而第二季度的利用率為 63%。

We spent USD 36.9 on CapEx in Q3 compared to USD 46 million for our second quarter 2017.

我們第三季度的資本支出為 36.9 美元，而 2017 年第二季度的資本支出為 4600 萬美元。

The breakdown of CapEx for the third quarter was 17.3% for testing, 12% for assembly, 63.1% for LCD driver, and 7.6% for bumping capacities.

第三季度資本支出細分為：測試17.3%，組裝12%，LCD驅動器63.1%，凸塊產能7.6%。

As you can see, the majority of our CapEx was invested in expanding our DDIC test capacity to meet current and expected customer demand levels.

如您所見，我們的大部分資本支出都投資於擴大 DDIC 測試能力，以滿足當前和預期的客戶需求水平。

Depreciation and amortization expenses were $24.5 million, or approximately 16.8% of revenue in the third quarter.

折舊和攤銷費用為 2,450 萬美元，約佔第三季度收入的 16.8%。

EBITDA for Q3 was $37.8 million, or 25.9% of revenue.

第三季度 EBITDA 為 3780 萬美元，佔收入的 25.9%。

EBITDA was calculated by adding depreciation and amortization together with operating profit.

EBITDA 是通過將折舊和攤銷與營業利潤相加計算得出的。

We reduced our short-term bank loans by about USD 34 million in Q3.

第三季度我們減少了短期銀行貸款約3400萬美元。

We also paid cash dividend of approximately USD 28.2 million in Q3.

第三季度我們還支付了約2820萬美元的現金股息。

When taken together, our balance of cash and cash equivalents [decreased] by about USD 79.5 million as compared to Q2.

總的來說，我們的現金和現金等價物餘額與第二季度相比[減少]約 7950 萬美元。

Overall, free cash flow in Q3 was negative USD 30.5 million, which was calculated by adding depreciation, amortization, interest income, together with operating profit, and then subtracting from -- subtracting CapEx, interest expense, income tax expense and dividend from the sum.

總體而言，第三季度的自由現金流為負 3050 萬美元，計算方法是將折舊、攤銷、利息收入和營業利潤相加，然後減去資本支出、利息費用、所得稅費用和股息。 。

As of September 30, 2017, our net debt balance was USD 94.2 million, which result in a net debt to equity ratio of 15.8%.

截至2017年9月30日，我們的淨債務餘額為9,420萬美元，淨債務與股本比率為15.8%。

While EBITDA, free cash flow and net debt to equity ratio are not defined by generally accepted accounting principles, we believe those are helpful indicators to measure our financial strength.

雖然 EBITDA、自由現金流和淨負債與股本比率並未按照公認的會計原則進行定義，但我們相信這些是衡量我們財務實力的有用指標。

Accounts receivables turnover days in Q3 were 78 days compared to 71 days in Q2.

第三季度應收賬款周轉天數為 78 天，而第二季度為 71 天。

Inventory turnover days were 48 days in Q3 compared to 48 days in Q2.

第三季度的庫存周轉天數為 48 天，而第二季度為 48 天。

As of October 31, 2017, the company's outstanding ADS number was approximately 10.9 million units, which represents around 25.4% of the company's outstanding common shares.

截至2017年10月31日，公司已發行ADS數量約為1090萬股，約占公司已發行普通股的25.4%。

Operator, that concludes our formal remarks.

接線員，我們的正式發言到此結束。

We can now take questions.

我們現在可以提問。

Operator?

操作員？

(Operator Instructions) Our first question comes from the line of Richard Shannon with Craig-Hallum Capital Group.

（操作員說明）我們的第一個問題來自 Craig-Hallum Capital Group 的 Richard Shannon。

I guess a few you questions from me.

我猜你有幾個問題問我。

I'll start out with S.J. Maybe if you could help us understand the dynamics regarding your commodity DRAM business?

我將從 S.J. 開始。也許您可以幫助我們了解您的商品 DRAM 業務的動態？

I think you made a comment regarding bottoming out in the single digit percentage of sales.

我認為您對銷售額的個位數百分比觸底發表了評論。

I wonder if you can be a little bit more accurate or precise on that?

我想知道你能否說得更準確或更精確一點？

Single digit could be 9% or could be much lower.

個位數可能是 9%，也可能更低。

So wanted to get a sense of what that is.

所以想了解一下那是什麼。

And do you see that in dollar terms improving over time?

您認為以美元計算的情況隨著時間的推移會有所改善嗎？

Okay.

好的。

Thank you, Richard, for the questions.

謝謝理查德提出的問題。

As we talked this subject about 6 months ago, this is a strategic decision for ChipMOS, because we do not participate, our key customer, [Xian campus] program.

正如我們大約 6 個月前討論過這個話題，這是 ChipMOS 的戰略決策，因為我們不參與我們的主要客戶[西安校區]計劃。

So after they completed Xian assembly line, their strategy reduced allocation, and which we already saw enough time to find and diversify our product and the customer base in order to minimize this impact.

因此，在他們完成西安裝配線後，他們的策略減少了分配，我們已經看到了足夠的時間來尋找和多樣化我們的產品和客戶群，以盡量減少這種影響。

As we report in the script, I read out that this customer occupied around 8% of our revenue.

正如我們在腳本中報導的那樣，我讀到該客戶約占我們收入的 8%。

And last quarter will be at 13%.

上個季度將為 13%。

And I think that will be the -- continue in the Q4.

我認為這將在第四季度繼續。

And since right now PC memory also had a recovery, so I think this number will maintain.

而且由於現在PC內存也有所恢復，所以我認為這個數字將會維持下去。

And we keep very closely working with that in order to maintain the good relationship.

我們一直與之密切合作，以維持良好的關係。

So I think right now we're also successful to diversify to the NOR Flash area, Niche DRAM and also optical sensor product areas.

因此，我認為現在我們也成功地實現了 NOR 閃存領域、Niche DRAM 以及光學傳感器產品領域的多元化。

So you can see that our revenue in the October is vis-a-vis better than the September, which we just announced.

所以你可以看到我們 10 月份的收入比我們剛剛宣布的 9 月份要好。

And I think that, based on the current market and customer feedback, our Q4 will be almost equal like Q3.

我認為，根據當前的市場和客戶反饋，我們的第四季度將幾乎與第三季度持平。

Does that answer your question?

這是否回答你的問題？

Yes, it does.

是的，它確實。

And you also gave me a very good entree into my second question, which is talking about the outlook for your fourth quarter.

您還為我的第二個問題提供了很好的切入點，即談論第四季度的前景。

You said close to third quarter levels.

你說接近第三季度的水平。

I'm presuming that -- especially referring to sales here, it sounds like maybe DRAM could be down, but some of your niche memory sounds like it's doing pretty well.

我猜想——特別是在這裡的銷售方面，聽起來 DRAM 可能會下降，但你們的一些利基內存聽起來表現得相當不錯。

Curious what's implied with your base LCD test assembly and gold bumping businesses.

很好奇您的基本 LCD 測試組裝和金凸塊業務意味著什麼。

Is that expected to be up sequentially in the fourth quarter?

預計第四季度會環比上升嗎？

If you can help us understand, that would be great, please.

如果您能幫助我們理解，那就太好了。

Okay.

好的。

You can see there's a -- even we invest a lot of CapEx in DDIC testing area, our utilization rates are still maintained at very high 87%, means all our new investment already fully utilized.

你可以看到，即使我們在 DDIC 測試領域投入了大量的資本支出，我們的利用率仍然保持在非常高的 87%，這意味著我們所有的新投資都已經得到充分利用。

And second one is that, regarding the gold bumping, increased a lot Q3 compared with the Q2.

第二個是，關於金凸塊，Q3比Q2增加了很多。

That's coming 2 area.

那就是2區。

One is 12-inch gold bumping increased a lot from the -- our domestic customers and also from our Korean customers.

一是12寸金凸塊增加很多，來自我們國內的客戶，還有我們韓國的客戶。

And the other one is some customers use their IPO solution in our gold bumping.

另一個是一些客戶在我們的金塊中使用他們的IPO解決方案。

So that see -- we can see through this one.

所以我們可以看透這個。

And for the next year, we also invest for 12-inch fine pitch COF capacity and capability for (inaudible).

明年，我們還將投資 12 英寸細間距 COF 產能和能力（聽不清）。

First one, in order to do this kind of high performance fine pitch COF, there clearly (inaudible) need to upgrade it.

首先，為了實現這種高性能的細間距COF，顯然（聽不清）需要對其進行升級。

And second one is that they need a longer testing time and also fine pitch (inaudible).

第二個是他們需要更長的測試時間和精細的音調（聽不清）。

And this we invest and we already started production.

我們對此進行了投資，並且已經開始生產。

So that will be good for us for long term wise.

因此，從長遠來看，這對我們有利。

But today since we invest a lot of high CapEx, they might slightly impact our gross margin, because of higher depreciation.

但今天，由於我們投資了大量高資本支出，由於折舊較高，它們可能會輕微影響我們的毛利率。

And then regarding to the latest one, we also got a good feedback from our Korean side and also local design house.

關於最新的一款，我們也從韓國方面和當地設計公司那裡得到了很好的反饋。

Right now, they also are starting to allocate lot of resource in order to meet -- establish their [major] infrastructure across the TDIC.

現在，他們也開始分配大量資源，以便在 TDIC 上建立他們的[主要]基礎設施。

Okay, that's helpful.

好的，這很有幫助。

Probably just 2 more questions for me.

可能還有兩個問題要問我。

I want to ask you about gross margins here.

我想問一下這裡的毛利率。

We saw your numbers here for the third quarter which are a bit lower than we were expecting, and I think kind of at the lower end of the range we've seen for the last couple of years.

我們在這裡看到第三季度的數字略低於我們的預期，我認為有點處於我們過去幾年看到的範圍的下限。

Wondering if you'd give us a sense of what does the path look like for gross margins to get above that 20% level and stay above there, at least from your consolidated reporting perspective?

想知道您能否讓我們了解毛利率達到 20% 以上並保持在該水平之上的路徑是什麼樣的，至少從您的綜合報告角度來看？

I mean, is that likely to happen and can you sustain it there?

我的意思是，這種情況有可能發生嗎？你能維持下去嗎？

Or are we going to see results more likely below the 20% level than above here in the near future?

或者，在不久的將來，我們是否更有可能看到低於 20% 水平的結果？

Yes.

是的。

Just based on our current forecast, I think that you might see back to the 20% second half of the next year.

僅根據我們目前的預測，我認為明年下半年可能會回到 20%。

Second half of next year.

明年下半年。

Okay, great.

好的，太好了。

And just last question from me, I'll jump on the line.

我將直接回答最後一個問題。

Wondering if you'd give us -- characterize activities going on with the JV in terms of investments, expected business there, profitability, et cetera.

想知道您是否願意向我們介紹一下合資企業在投資、預期業務、盈利能力等方面正在進行的活動。

How fast -- any way you can help us understand how fast that operation is growing?

有多快——您能以什麼方式幫助我們了解該業務的增長速度有多快？

And if you can make any comments about the competitive environment within China for test and assembly services for LCD, obviously given what Chipbond has announced in relationship, I think, with the BOE would be great to hear as well.

如果您能對中國液晶顯示器測試和組裝服務的競爭環境發表任何評論，顯然考慮到頎邦已宣布與京東方的關係，我認為也很高興聽到。

Yes.

是的。

I'm sorry, I don't have any comment about the BOE and with the Chipbond, because it's not my -- I'm not the right person to answer the question.

抱歉，我對 BOE 和 Chipbond 沒有任何評論，因為這不是我的——我不是回答這個問題的合適人選。

And regarding to the China JV, since right now we are consolidate into the long term investment.

至於中國合資企業，因為現在我們正在鞏固長期投資。

So just before the Q2 revenue [around USD 9 million] slightly up in the Q3.

因此，就在第二季度之前，第三季度的收入[約 900 萬美元]略有上升。

And right now, it since you know that our partner is pretty aggressive working in the cross area.

現在，因為您知道我們的合作夥伴在跨領域工作非常積極。

So Shanghai [will be to pull] this new development, allocate more resource in the flash memory.

所以上海[將會拉]這個新的發展，在閃存上分配更多的資源。

And the second one I would like to mention here is the long approval process from both Taiwan and China governments.

我想在這裡提到的第二個問題是台灣和中國政府漫長的審批過程。

We just completed the first fundraising in June 30.

我們剛剛在6月30日完成了第一筆籌款。

And after we got a fundraising, then we speed up the investment.

當我們籌集到資金後，我們就會加快投資速度。

So the (inaudible)project is delayed almost 6 months.

因此（聽不清）項目被推遲了近 6 個月。

So please give some time.

所以請給一些時間。

When we hear a good news, we can share with you.

當我們聽到好消息時，我們會與您分享。

(Operator Instructions) There are no further questions at this time, I'd like to turn -- one moment, please.

（操作員說明） 目前沒有其他問題，我想轉——請稍等。

We have another question from the line of Jerry Su with Credit Suisse.

我們還有一個來自瑞士信貸銀行的蘇杰瑞 (Jerry Su) 的問題。

Just wondering that if you could give us more color about the optical sensing business that you have mentioned.

只是想知道您是否能為我們提供有關您提到的光學傳感業務的更多信息。

What kind of contribution you're seeing right now?

您現在看到什麼樣的貢獻？

And how big can that grow into -- entering the 2018?

進入 2018 年，這個數字能增長到多大？

Yes.

是的。

I think maybe hours later you can get more color on it from our partner.

我想也許幾個小時後你可以從我們的合作夥伴那裡得到更多的顏色。

We're working for this project for quite a long time and we start the production maybe next July.

我們為這個項目工作了相當長的時間，我們可能會在明年七月開始製作。

And so far so good.

到目前為止一切順利。

And so we are going to provide any spec to other application which our customers get that and I think we have engineering capability and capacity to support this development.

因此，我們將為我們的客戶獲得的其他應用程序提供任何規格，我認為我們有工程能力和能力來支持這一開發。

So we are committed and very optimistic for 2018.

因此，我們對 2018 年充滿信心並非常樂觀。

Okay.

好的。

And then how much CapEx you plan to spend for remaining of this year and also 2018?

那麼今年剩餘時間以及 2018 年您計劃花費多少資本支出？

And how -- and then how would that impact your depreciation and also your dividend payout policy?

那麼這將如何影響您的折舊以及您的股息支付政策？

I think that -- let me answer your question like this.

我想——讓我這樣回答你的問題。

I think 2018 and -- is a very big diversification for ChipMOS.

我認為 2018 年對於 ChipMOS 來說是一個非常大的多元化時期。

The great thing about the business is customer and end market diversification.

該業務的偉大之處在於客戶和終端市場的多元化。

This give us strength as we de-risk any one customer and is adding profitability of our business.

這為我們降低任何一位客戶的風險提供了力量，並增加了我們業務的盈利能力。

The majority of our business and customer are performing well as of Q4, and we are optimistic about the prospects for 2018 given everything we had discussed on the call.

截至第四季度，我們的大多數業務和客戶都表現良好，鑑於我們在電話會議上討論的所有內容，我們對 2018 年的前景感到樂觀。

And based on our discussion with customers, there are also growth opportunities.

根據我們與客戶的討論，也存在增長機會。

As we mentioned, 3D sensing, OLED and the 12-inch fine pitch COF that should start to gain revenue next year.

正如我們提到的，3D 傳感、OLED 和 12 英寸細間距 COF 應該會在明年開始獲得收入。

I think the headwind is the low allocation with Richard just asking before, I also had no answer to it.

我認為逆風是低分配，理查德之前只是問過，我也沒有答案。

And important point to our customer used to represent high 10 of our revenue in any given quarter.

對於我們的客戶來說，重要的一點過去在任何特定季度都占我們收入的前 10 名。

We have already moved down to a single digit.

我們已經下降到個位數。

So while we think the allocation may go a little bit lower, we are really nearly [de-risk position] with the other customers and [any time] will not be material on our results.

因此，雖然我們認為分配可能會稍微低一些，但我們實際上已經接近與其他客戶[降低風險位置]，並且[任何時候]都不會對我們的結果產生重大影響。

And internally guide -- internally that's our patent will be (inaudible) normally patent for the year following growth for Q2, Q3 and see it slightly drop in the Q4.

內部指導 - 在內部，我們的專利將（聽不清）通常在第二季度、第三季度增長後的一年獲得專利，並在第四季度略有下降。

And this is expected of broader semiconductor industry.

這是更廣泛的半導體行業的預期。

And 2018, based on the current measure, should be higher than 2017.

而按照目前的衡量標準，2018年應該會高於2017年。

And our internal long term goal in package is our modeling.

我們的內部長期目標是我們的建模。

Obtaining a growth -- revenue growth is around 5% a year and CapEx investment is around 15% to 30% of our revenue.

實現增長——收入每年增長 5% 左右，資本支出投資佔收入的 15% 至 30% 左右。

In gross margin, we set a target, is 17% to 30%.

在毛利率方面，我們設定的目標，是17%到30%。

This is (inaudible) package.

這是（聽不清）包。

And we can adjust our CapEx.

我們可以調整我們的資本支出。

And based on the customer feedback, (inaudible).

並根據客戶反饋（聽不清）。

So this is to answer your question.

所以這是為了回答你的問題。

And how about the dividend payout?

股息支付情況如何？

Dividend payout our internal is -- we set a goal, is around 50% to 60% of our net income, and depends on the CapEx and free cash flow is also for because a lot of shareholders also ask we had a big gain in the Q1.

我們內部的股息支付是——我們設定了一個目標，大約是我們淨利潤的 50% 到 60%，並且取決於資本支出和自由現金流，因為很多股東也問我們在Q1.

And right now we're working very closely with the U.S. shareholder and local shareholder, and our board to see which is the best to the shareholder, also can (inaudible) some tax effect.

現在我們正在與美國股東和當地股東以及我們的董事會密切合作，看看哪一個對股東來說是最好的，也可以（聽不清）一些稅收影響。

At this time, there are no further questions.

目前，沒有其他問題了。

I'll turn the floor back to management for final remarks.

我將把最後的發言交回給管理層。

Yes.

是的。

Thank you, everyone, who joined our Q3 conference call.

謝謝大家參加我們的第三季度電話會議。

Thank you again.

再次感謝你。

Bye-bye.

再見。

Thank you.

謝謝。

This concludes today's teleconference.

今天的電話會議到此結束。

You may disconnect your lines at this time.

此時您可以斷開線路。

Thank you for your participation.

感謝您的參與。