Episode Details

ChipMOS TECHNOLOGIES INC. (IMOS) Q2 2026 — Revenue NT$7,383.1M / US$231.8M at NT$31.85, +6.5% q/q and +28.7% y/y - the best quarter since 2014. Gross margin 18.0% vs 13.8% in March and 6.6% a year ago. EPS US$0.80 per basic ADS vs a US$0.64 bar, a 25% BEAT. The 6-K landed 6:10am ET Aug 11, BEFORE the open, so Aug 11 IS the reaction: +11.74% to $59.28 on 1.84x volume. ChipMOS printed its best quarter since 2014 - revenue NT$7,383.1 million (about US$231.8 million), gross margin 18.0% against 13.8% three months earlier, and US$0.80 per basic ADS against a US$0.64 bar. The stock rose 11.74%. But that revenue had been public since July 10 - Taiwan requires monthly revenue filings - so the only thing that could surprise was margin. Utilization was only 72%, and assembly utilization FELL from 84% to 78%. The beat was a price rise, and the Board spent it the same morning. THE CALL: HOLD (3/5, A CAPEX CALL, NOT A DEMAND CALL) — base-case value ~$63.0 vs ~$59.28 today. KEY METRICS: - CALL: HOLD 3/5, fair value $63.00 per ADS vs the $59.28 reaction close - about 6% above. Bull $96, base $63, bear $24, weighted 55/25/20. There is NO US sell-side coverage; the only live coverage is 3 Taipei analysts on TWSE 8150 averaging NT$123, about $77 per ADS, so we are 18% BELOW them. - THE ANGLE - PRICE, NOT VOLUME: overall utilization was 72% vs 71% in March, and ASSEMBLY UTILIZATION FELL from 84% to 78%. Gross margin still went 13.8% to 18.0% because the chairman 'selectively raised the memory OSAT price'. Revenue rose NT$447.5M sequentially and gross profit NT$370.1M: 83 cents of every incremental dollar dropped through. - THE CASH: 1H26 operating cash flow NT$1,531.7M against a NT$3,209.6M investing outflow; cash went NT$14,858.9M to NT$12,552.3M, DOWN NT$2,306.6M in the best half since 2014. Q2 capex alone, NT$2,380.2M, exceeded the whole half's operating cash flow by NT$848.5M. - WHY THE DECK STILL SAYS 'FREE CASH FLOW +NT$735.9M': its own footnote starts from operating PROFIT plus D&A, not operating cash, so it contains no working capital at all - no receivables, no payables, no inventory. Inventory turnover days went 50 (Jun 25) to 60 (Mar 26) to 70 (Jun 26). - THE DECISION MADE THE SAME DAY: the Board raised the 2026 capex plan on the morning of the beat. CFO Silvia Su: usually about 20% of revenue, this year 'likely exceeding 25%', and 2027 'will likely exceed 25% of revenue again'. Q2 capex was 1.95x depreciation (NT$2,380.2M vs NT$1,218.1M) and depreciation has been FALLING - the 2014-vintage plant is largely written off. - THE BALANCE SHEET: the release leads with 'US$394.1 million of cash' - but that is not net cash. Borrowings were about NT$15.82B against NT$12.38B of cash at 31 March (net debt ~US$108M). At 31 December 2024 it was NT$13.76B of borrowings against NT$15.22B of cash - net CASH. The July dividend (NT$1.23/share, US$0.760/ADS) came out of CAPITAL SURPLUS. - THE BASIS, PROVEN: 1 ADS = 20 ordinary shares. NT$1.28 x 20 / 31.85 = US$0.804, matching the reported US$0.80; it checks again on Q1, on Q2 2025 and on the dividend. The 'revenue miss' is pure FX: NT$7,383.1M / 236.95 = 31.16, but the company translated at 31.85. What to watch: UP: July revenue NT$2,823.0M, +11.2% m/m and +43.6% y/y - the biggest month since 2014; DRAM demand 'continues to exceed supply'; 28 points of unused utilization sit under an 18% margin, already paid for, at 8.0x EBITDA. DOWN: cash fell NT$2,306.6M in the half, Q2 capex alone exceeded the half's operating cash flow, and the Board voted capex above 25% of revenue for BOTH 2026 and 2027. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.