Like nearly every other company in or around the semiconductor industry, ChipMOS Technologies
It's a little bit ironic, really. Chip designers like Intel
So when ChipMOS CEO Shih-Jye Cheng talks about DRAM pricing pressures, and CFO S.K. Chen says the company cut capital expenditures (capex) by more than half compared to last year, the magnitude of the harsh semiconductor environment these days really hits home. What started last year as scattered reports of slow high-end cell phone sales from the likes of Samsung and Nokia
ChipMOS is already -- by necessity -- a lean organization. The company files its reports from Bermuda for tax reasons, for goodness' sakes, and operating costs are often no more than 6% of sales. It's the cost of materials and contract pricing that drives the ups and downs here. And right now, things are more down than up.
Again, the stock has already been severely spanked by the market, and ChipMOS is a very cheap stock in an already cheap sector, with a P/E under 10. A concerned reader told me that he wants to like this stock, but the lack of cash flow was too troubling. We don't have a cash flow statement yet, but the capex controls must be a good start. Perhaps it's time to start liking ChipMOS for real.
Further Foolish reading:
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