00:00 [Interpreted] Greetings, and welcome to the ChipMOS Third Quarter Twenty Twenty One Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. 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.

0:30 [Interpreted] Thank you, operator. Welcome everyone to ChipMOS third quarter 2021 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 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. 01:16 Please note, we have posted a presentation on the MOPS and the ChipMOS' website www.chipmos.com to accompany today's conference call. Before we begin the prepared comments, we advise you to review our forward-looking statements disclaimer, which is noted as the Safe Harbor notice on the second page of today's presentation. As a reminder, today's conference call is being recorded and a replay will be made available later today on the company's website. 1:46 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.

01:57 [Interpreted] Yes. Thank you, G.S. We appreciate everyone joining our call today. This was another strong quarter for us with record revenue for the fourth consecutive quarter in Q3 twenty twenty one. We have delivered over twenty three point four percent revenue growth in the first nine months of twenty twenty one compared to twenty twenty with strong profitability and cash flow. We remain very close with our customers and are doing a good job supporting their demand and forecasts. 02:28 Challenges remain across the broader industry, but we are covering everything within our control. Let me give you some highlights from the quarter. First, we achieved the new quarterly revenue record with a twenty five point nine percent increase in Q3 twenty twenty one revenue year-over-year. This is up two point six percent over Q2 twenty twenty one. Gross margin increased eight hundred basis points for Q3 twenty twenty one to twenty seven point three percent compared to Q3 twenty twenty. Higher costs led to a ninety basis point decline compared to Q2 twenty twenty one and we achieved NT$ one point nine three in Q3 EPS compared to NT$ one point seven six of Q2 twenty twenty one with a one hundred and seventeen percent increase in the first nine months of twenty twenty-one. NT$ five point zero one compared to the same period of twenty twenty NT$ two point three one. I am very pleased that our profitability expansion is higher than our revenue growth. We continue to stress operating efficiency targets and utilization improvement. Our ongoing investments in automation are helping us maintain a Safe Work environment and let us hold operating expense at six point five percent of Q3 three revenue. 03:51 The overall utilization was eighty five percent in Q3 compared to eighty…

08:30 [Interpreted] Thank you, S.J. All dollar amounts cited in our presentation are in NT$. The following numbers are based on the exchange rates of NT$ twenty seven point eight four against one US$ as of September twenty twenty one. All the figures were prepared in accordance with Taiwan International Financial reporting standards. Referencing presentation page twelve consolidated operating results summary. For the third quarter of twenty twenty one, total revenue was NT$ seven thousand one hundred and sixty one million. Net profit attributable to the company was NT$ one three ninety nine million in Q3. Net earnings for the third quarter of twenty twenty one were NT$ one point nine three per basic common share or one US$ and zero point three eight dollars per basic ADS. 09:24 We achieved a one hundred and sixteen point nine percent increase in net earnings for the first nine months of twenty twenty one to NT$ five point zero one from NT$ two point three one in the first nine months of twenty twenty. EBITDA for Q3 was NT$ two thousand seven hundred and twenty four million, EBITDA was calculated by adding depreciation and amortization together with operating profit. 09:51 Return on equity of Q3 was twenty point four percent. Referencing presentation page thirteen consolidated statements of comprehensive income. Compared to 2Q twenty one. Total 3Q twenty one revenue increased two point six percent compared to 2Q twenty one. 3Q twenty one gross profit was NT$ one thousand nine hundred and fifty eight million with gross margin at twenty seven point three percent compared to twenty eight point two percent in 2Q twenty one. This represents a decrease of zero point nine ppts. 10:28 Our operating expenses in 3Q twenty were NT$ four hundred and sixty three million or six point five…

15:40 [Interpreted] Thank you, Silvia. As we move into the fourth quarter, we expect to see continued customer restocking for consumer electronics launches, workplaces restarting and economies around the world continuing to grow. 15:56 Capacity is expected to remain tight and OSAT ASP will likely increase led by product mix optimization. However, this continues to be a challenging period for the industry as we all work together to remove supply chain bottlenecks. 16:11 We were not directly impacted by recent power shortages in China, but this does not help when wafer supply is already tight. Overall, we are cautious about the fourth quarter and taking a conservative view given broader market challenges and how strong the first nine months of twenty twenty one have been for us. For example, in memory, despite demand increasing in consumer and auto electronics, there is a semiconductor supply imbalance that may impact overall Q4 demand in the segment. Therefore, We are taking a conservative view about memory in Q4 and in DDIC tightened wafer supply is expected to continue in Q4. Which will cause DDIC utilization level fluctuations. However, our ASP continues to increase driven by customers optimize their product mix and that increase in Q4. So, we are some with cautiously optimistic about DDIC continuing to grow in Q4. 17:12 Operator, that concludes our formal remarks. We can now take questions.

17:17 [Interpreted] Operator, thank you. At this time, we will be conducting question-and-answer session. Our first question comes from Jerry Su from Credit Suisse. You may begin.

17:32 [Interpreted] Why did Q3 revenue grow but gross margin declined?

17:38 [Interpreted] In Q3 we had increased depreciation, higher power costs and we recognized higher bonus costs due to the higher profit in Q3. Gold material inventory valuation loss compared to previous quarter.

17:53 [Interpreted] Could you provide more color about Q4 revenue and gross margin?

17:59 [Interpreted] As we move into the fourth quarter, in memory, despite demand increasing in consumer and auto electronics, there is a semiconductor supply imbalance that may impact overall Q4 demand in the segment. Therefore, we are taking a conservative view about memory in Q4. And in DDIC, our ASP continues to increase, driven by customers optimizing their product mix and OLED increasing in Q4. Further, ChipMOS did get some rush orders from customers led by the uncertainty of power shortages in China. So, we are somewhat cautiously optimistic about DDIC to be flat in Q4. In all, given the strength in the first nine months of twenty twenty one, we expect revenue could be flat to down in the low single digits. Gross margin would be slightly impacted by revenue declines and higher depreciation in Q4.

18:58 [Interpreted] Next question comes from Stanley Wang of Sinopac Securities. Stanley, you may begin.

19:04 [Interpreted] Any impact to Unimos from the power shortage in China recently. If any, is there any calendar measure?

19:15 [Interpreted] There was no impact and Unimos has been turning profitable.

19:20 [Interpreted] Stanley Wang, Is there any customer input seeing signs of wafer supply improvement? How is chip MOS offsetting the impact on operations of wafer supply shortages?

19:34 [Interpreted] So far, we are not seeing any real wafer supply relief under such situation, we did see customers optimizing product mix causing a longer test time. Currently, better UT for high end testers led and worst UT for the others.

19:52 [Interpreted] Business momentum for memory products in Q4 by ranking, which is stronger nor NAND or DRAM?

20:03 [Interpreted] Nor Flash is better owing to auto NTWS application demand. Secondly, would be [Indiscernible] NAND and then niche DRAM.

20:12 [Interpreted] How is the tax rate of twenty twenty one?

20:18 [Interpreted] As usually about eighteen percent.

20:22 [Interpreted] Thank you. And I am not showing any further questions in the queue. I would like to turn the call back over to G.S.

20:32 [Interpreted] G.S. Shen. Thank you. I will orally read some questions from foreign institutional investors. The question is asking about your twenty twenty two dividend?

20:46 [Interpreted] We don't expect any major changes to our dividend payout ratio, fifty sixty percent of EPS. However, the final dividend will be discussed and proposed by our Board and need to get approval at our normal annual AGM.

21:00 [Interpreted] 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.

21:13 [Interpreted] Thank you everyone for joining our conference call. Please email our IR team if you have any more questions. We appreciate your support. Goodbye.

21:27 [Interpreted] Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.