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Semiconductor test and packaging company ChipMOS Technologies Inc. (NASDAQ: IMOS) saw its stock jump more than 12% on Tuesday after reporting second-quarter 2026 results that showed revenue hitting its highest quarterly level since 2014.
Revenue came in at 7.38 billion New Taiwan dollars ($231.8 million), up 28.7% year over year and 6.5% sequentially. That's a big deal for a company that's been through some lean years, and the market responded accordingly.
The margin story is even more impressive. Gross margin expanded to 18%, up from 13.8% in the first quarter and just 6.6% a year earlier. That's a massive improvement in a short time, and it shows up in the bottom line.
Net profit attributable to equity holders rose 76.6% sequentially to 891.7 million New Taiwan dollars ($28 million), up from 504.9 million New Taiwan dollars ($15.9 million). The company reported earnings of 80 cents per basic American depositary share, compared with a loss of 47 cents per ADS a year earlier.
ChipMOS also generated net free cash inflow of 735.9 million New Taiwan dollars ($23.1 million) during the first half of 2026. The company ended the period with 12.55 billion New Taiwan dollars ($394.1 million) in cash and cash equivalents.
That's a solid cushion, and it gives the company room to invest aggressively in growth.
Chairman and President S.J. Cheng said demand continued to exceed capacity during the quarter. He said stronger pricing, product mix and utilization helped the company turn rising demand into improved operating leverage.
Cheng said customer visibility remains strong, while AI-driven demand continues to outpace available supply. That's a nice problem to have, but it also means the company has to invest to keep up.
Memory products gained momentum as customers restocked and assembly and testing utilization improved. ChipMOS expects DRAM growth to accelerate in the third quarter, supported by strong DDR4 demand and the ramp-up of DDR5 products.
Flash momentum remains steady on seasonal stocking despite some customer inventory adjustments, although management expects it to trail DRAM.
Meanwhile, seasonal OLED demand, automotive panels and rush orders are expected to support improvement in the display driver integrated circuit business during the second half.
To meet that demand, ChipMOS plans to expand memory assembly and testing bottleneck stations while investing in automation and AI across its operations. The company also plans to add testing capacity for longer-term opportunities in silicon photonics and AI-related application-specific integrated circuits.
ChipMOS acquired a new facility in Tainan Science Park to support memory customers' capacity needs beginning in 2027. The facility will also support strategic expansion for mixed-signal customers and new product projects.
Cheng said ChipMOS selectively raised memory outsourced semiconductor assembly and test pricing during the second quarter to offset higher material costs. The company also reached agreements with customers to pass through rising costs in memory and driver IC packaging and testing.
During the earnings call, ChipMOS said it is stepping up investment to capture rising demand from memory and AI-related markets.
The company expects 2026 capital spending to exceed 25% of revenue, above its usual goal of about 20%, as it expands memory assembly and testing capacity and invests in AI-related ASICs and silicon photonics. And it expects capital spending to remain above 25% of revenue in 2027 as it continues investing for growth.
That's a significant commitment, and it signals management's confidence that the AI-driven demand isn't a flash in the pan.
IMOS Price Action: ChipMOS shares were up 12.40% at $56.00 at the time of publication on Tuesday.
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