Greetings, and welcome to the ChipMOS first quarter 2024 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.
Thank you, operator. Welcome everyone to ChipMOS first quarter 2024 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. Please note, we have posted a presentation on the MOPS and also on the ChipMOS website, www.chipmos.com, to accompany today's conference call. Before we begin the prepared comments, we remind you to review our forward-looking statements disclaimer, which is noted as the safe harbor notice on the second page of today's presentation and in the results press release we issued. As a reminder, today's conference call is being recorded, and a replay will be made available later today on the company's website. 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.
Yes. Thank you, G.S. We appreciate everyone joining our call today.
We are very pleased with our strong results and business execution in the face of industry headwinds and end market challenges. We continue to carefully add capacity, expand our leadership, and build long-term value for shareholders. In terms of Q1 highlights, our Q1 revenue increased 17.7% compared to Q1 2023 and was down 5.4% from Q4 2023, reflecting fewer working days in Q1 and industry headwinds. Q1 gross margin increased 180 basis points to 14.2% from 12.4% in Q1 2023 and decreased 590 basis points compared to Q4 2023. Net earnings more than doubled to TWD 0.6 in Q1 2024 on a year-over-year basis. Our overall utilization rate was strong at 63% in Q1 2024. Assembly utilization increased to 62% and average test utilization was 60%.
DDIC was at 67% and bumping UT level increased to 61%. Regarding our manufacturing business, assembly represented 25.6% of Q1 revenue. Mixed-signal and memory testing represented 20.4%, and wafer bumping represented 21.3% of Q1 revenue. On a product basis, our DDIC product represented 32.5% of total revenue in Q1, with gold bumping representing about 18.6%. Revenue from DRAM and SRAM represented 16.3% of total Q1 revenue. Our mixed-signal products represented 9.7%. As additional color on our business, our memory products represented 39.2% of total Q1 revenue. Memory product revenue increased 1.6% compared to Q4 2023 and increased 26.4% on a year-over-year basis.
DRAM revenue decreased 3.6% compared to Q4 2023 and represented 15.8% of total Q1 revenue. Flash revenue represented about 23% of Q1 revenue, which was up 5.6% compared to Q4 2023. NAND flash also benefited significantly from customers rebuilding inventory levels and increased 17.4% compared to Q4 2023. NAND flash represented 45.3% of Q1 total flash revenue. We are pleased with our growth in this important area to the company and expect growth throughout 2024 based on demand we see today. Moving on to driver IC and gold bumping revenue, this represented about 51% of total Q1 revenue. This was up 14.3% on a year-over-year basis but decreased 11% compared to Q4 2023.
Of note, gold bumping revenue was down 1.8% compared to Q4 2023, and DDIC revenue was down 15.5% compared to Q4 2023. Demand from auto panels drove more than 27% of our Q1 DDIC revenue. We continue to view automotive as an important mid- and long-term growth market for us. The most demanded auto features are reliant on semiconductors. As a result, semiconductor content is increasing at a rapid rate in models at all price points. Our track record of quality excellence and required qualifications gives us a competitive edge in serving auto customers. Regarding TDDI, it represented around 20.7% of Q1 DDIC revenue, with OLED at 23.3% of Q1 DDIC revenue. On an end market basis, total revenue from automotive and industrial represented about 22% of Q1 revenue. Smartphones-related demand represented 38.4% of Q1 revenue and decreased 10.9% compared to Q4 2023.
Consumer-related demand represented 20.5% of Q1 revenue and increased to 6.3% compared to Q4 2023. TVs panel demand represented 15.8% of Q1 revenue, which was flat with Q4 2023. Lastly, computing accounted for 3.3% of Q1 revenue. Now let me turn the call to Ms. Silvia Su to review the first quarter 2024 financial results. Silvia, please go ahead.
Thank you, S.J. All dollar amounts cited in our presentation are in TWD. The following numbers are based on the exchange rates of TWD 31.93 against $1 as of March 29, 2024. All the figures were prepared in accordance with Taiwan-IFRSs. Referencing presentation page 12, consolidated operating results summary. For the first quarter of 2024, total revenue was TWD 5,419 million. Net profit attributable to the company was TWD 438 million in Q1.
Net earnings for the first quarter of 2024 were TWD 0.60 per basic common share, or $0.38 per basic ADS. EBITDA for Q1 was TWD 1,544 million. EBITDA was calculated by adding depreciation and amortization together with operating profit. Return on equity of Q1 was 7%. Referencing presentation page 13, consolidated statements of comprehensive income. Compared to 4Q 2023, total 1Q 2024 revenue decreased 5.4% compared to 4Q 2023. 1Q 2024 gross profit was TWD 771 million, with gross margin at 14.2% compared to 20.1% in 4Q 2023.
This represents a decrease of 5.9 ppts. Our operating expenses in 1Q 2024 were TWD 430 million, or 7.9% of total revenue, which decreased 3.5% compared to 4Q 2023. Operating profit for 1Q 2024 was TWD 363 million, with operating profit margin at 6.7%, which is about a 5.8 ppts decrease compared to 4Q 2023. Net non-operating income in 1Q 2024 were TWD 156 million compared to net non-operating expenses of TWD 137 million in 4Q 2023.
The difference is mainly due to the increase of the foreign exchange gains of TWD 348 million from the foreign exchange losses of TWD 195 million in 4Q 2023 to the foreign exchange gains of TWD 153 million in 1Q 2024 and partially offset by the decrease of share of profit of associates accounted for using equity method of TWD 55 million. Profit attributable to the company in 1Q 2024 decreased 9.2% compared to 4Q 2023.
This primarily reflects the decrease of operating profit of TWD 352 million and partially offset by an increase of net non-operating income of TWD 293 million and the decrease of income tax expense of TWD 14 million. Basic weighted average outstanding shares were 727 million shares. Compared to 1Q 2023, total revenue for 1Q 2024 increased 17.7% compared to 1Q 2023. Gross margin at 14.2% increased 1.8 ppts compared to 1Q 2023. Operating expenses increased 7.2% compared to 1Q 2023.
Operating profit margin at 6.7% increased 2.7 ppts compared to 1Q 2023. Net non-operating income increased TWD 113 million compared to 1Q 2023. The difference is mainly due to the increase of the foreign exchange gains of TWD 197 million from the foreign exchange losses of TWD 44 million in 1Q 2023 to the foreign exchange gains of TWD 153 million in 1Q 2024 and partially offset by the decrease of share of profit of associates accounted for using equity method of TWD 44 million, rental income of TWD 16 million, and interest income of TWD 13 million.
Profit attributable to the company increased 116.3% compared to 1Q 2023. The difference is mainly due to an increase of operating profit of TWD 178 million and net non-operating income of TWD 113 million and partially offset by the increase of income tax expense of TWD 55 million. Referencing presentation page 14, consolidated statements of financial position & key indices.
Total assets at the end of 1Q 2024 were TWD 45,563 million. Total liabilities at the end of 1Q 2024 were TWD 20,280 million. Total equity at the end of 1Q 2024 was TWD 25,283 million. Accounts receivable turnover days in 1Q 2024 were 88 days. Inventory turnover days was 51 days in 1Q 2024. Referencing presentation page 15, consolidated statements of cash flows.
As of March 31, 2024, our balance of cash and cash equivalents was TWD 12,165 million, which represents a decrease of TWD 189 million compared to the beginning of the year. Net free cash inflow for the first quarter of 2024 was TWD 800 million compared to TWD 1,033 million for the same period in 2023. The decrease was mainly due to the increase of CapEx of TWD 319 million and income tax expense of TWD 55 million, and partially offset by the increase of operating profit of TWD 178 million.
Free cash flow was calculated by adding depreciation, amortization, interest income together with operating profit, and then subtracting CapEx, interest expense, income tax expense, and dividend from the sum. Referencing presentation page 16, capital expenditures and depreciation. We invested TWD 633 million in CapEx in Q1. The breakdown of CapEx in Q1 was 4.4% for bumping, 22.4% for LCD driver, 46.8% for assembly, and 26.4% for testing. Depreciation expenses were TWD 1,181 million in Q1. As of April 30, 2024, the company's outstanding ADS number was approximately 4.3 million units, which represents around 12% of the company's outstanding common shares. That concludes the financial review. I will now turn the call back to our Chairman, Mr. S.J. Cheng, for our outlook. Please go ahead, sir.
Thank you, Silvia. According to the current industry situation and customers' feedback, we are cautiously optimistic entering Q2.
Industry headwinds are expected to remain in nearly every end market. We expect Q1 to be the seasonal trough quarter for 2024, which is in line with normal industry seasonality. We expect the broader market condition will improve as we move through 2024, leading to a stronger second half with improved operating momentum, end markets, and end customer inventory levels. In our memory product, the assembly and test UT level are improving with DRAM and flash customers restocking. In our DDIC product, the automotive panel and OLED demand still remain stable compared to other products. This leads to the high UT level of high-end DDIC test platforms. In addition, benefiting the TV rush order, it is increasing the related assembly and test UT level. Therefore, we think DDIC will outgrow memory product momentum in Q2.
With regard to CapEx, based on current customer forecasts and UT level improving, we plan to support customers with careful CapEx additions, including our DDIC high-end test platform in the second half of the year. We will continue to be disciplined in order to maintain our balance sheet strength, while also maintaining our business growth momentum and competitive advantage. In general, based on market commentary across the industry, we expect the inventory situation to improve as we move through the second half with headwinds decreasing. Finally, in terms of our capital allocation, our board approved our latest dividend. This reflects our balance sheet strength, strong market position, and our focus on building shareholder value. Pending shareholder approval at our May 2024 AGM, we will distribute TWD 1.8 per common share. Operator, that concludes our formal remarks. We can now take questions. Operator. Thank you.
At this time, we will be conducting a question-and-answer session. Our first question comes from Hoss from UBS. You may begin.
Yes. Hi, Jesse, Dr. Cheng, and the management team. Thanks for taking my questions. If possible, I will use English to ask questions for the overseas investors, and you could respond in English or Chinese. My first question will be on your business outlook for Q2. As you just mentioned, with the supply chain load and TV demand outlook is still solid into the sports events, while the smartphone demand remains pretty muted. On the memory business, NAND and DRAM demand, as you just mentioned, the pricing and also the demand has been improving. Could you try to quantify your business outlook for second quarter? Could you rank the relative strength and weakness for your business during the quarter? Thank you so much.
Okay. This is Jesse speaking. Thanks for your question. I will give you some of the ranking, respectively based for memory and DDIC. For DDIC, as Chairman mentioned, still we see the OLED and automotive rotation. Relate to the maintaining the momentum. Since we have different domestic or overseas customers for DDIC, recently, we did see the TV large panel driver IC requirement looks better, improved recently. For the small panel one, maybe as you mentioned here, muted. As for memory, both of the DRAM and flash customer requirement has been improving and followed by previous NAND flash demand. Recently, we also see some of our NOR flash customer started to picking up their utilization and also some of their loading to ChipMOS.
Yeah.
This is the amount of color that I can share with you.
Okay, sure. With your peers, whether it is like front-end fabless or the back-end peers, in general guiding like a 5%-10% growth for second quarter-on-quarter, do you think your rates will be similar to your peers, or you could potentially outperform your peers with your higher memory exposure? Thank you.
Okay. Since normally we do not provide a guidance for the following quarter, I think we can just tell you that Q1 will be the bottom and quarterly, our result will be gradually improving and the momentum will be as our Chairman just mentioned, maybe in Q2, DDIC would perform slightly better than memory.
Okay. So with that mix shift, how should we think about your margins outlook relative to your first quarter? Because, I think your utilization is improving, but I think the mix is more unfavorable with your mix shifting towards more driver IC, right?
Yeah. So certainly, when we improve our utilization, the gross margins will certainly be improved. I think in Q2, as we usually communicate with you guys, Q2, there will be less additional cost adder, like bonus or seasonality cost up, like electricity in Q3. So these may be the positive factors to our cost structure and certainly the profitability.
Okay. Could you also remind us how the potential electricity price hike could impact your business for second quarter? How much is it percent of your total cost of goods sold or cost structure? Yeah.
We did do some modeling for each scenario, even though that is probably not final. In our ranking, maybe the increased percentage will be for our industry, maybe 14% increase. That will be we will break into our cost. For each factor, maybe for the corresponding, maybe within nearly 0.5% for each quarter.
Okay. With that kind of electricity cost hike, the impact to your gross margins would be around 0.5% each quarter. Okay, got it.
Right.
That is very helpful. My second question would be on your outlook into second half. Could you discuss the demand you are seeing now for second half from your existing customers and potential opportunity from new customers or projects? Do you think you will be able to gain market share this year for the outgrowth relative to your back-end peers who are guiding flat to mild up year-on-year for this year? What should we think about the potential revenue mix for your first half versus second half? Thank you.
Let me answer your question again for the second half. I think for the OLED and the automobile driver area are significantly increased because of the demand issue and application issue, especially in the display area. For mixed-signal and sensor area also will be gradually increased. For memory-wise, since we had several customers, they are going to expand their wafer fab capacity. They are going to increase our loading for the second half. As you can see for both memory and driver and mixed-signal, that area, second half will be better than the first half. For priority-wise, is a high-end driver IC will be the highest one. Then the niche DRAM and the 2D NAND, NOR flash, and mixed-signal will be the second. We are pretty optimistic about the second half.
Okay. When you talk about the significant or meaningful improvements for your OLED driver IC demand second half, could you please elaborate more of what kind of the gains, either it is from new customers or new projects or you are seeing that higher OLED penetration in smartphones that is lifting the demand there and support your utilization in second half. Thank you.
Yeah. Actually, as I mentioned, you are
Great. We are going to increase some high-end TDDI tester because the OLED increase and automobile also increase. That is driver area, and that is coming from our existing customer, their new application.
Okay. Yes. That is very helpful. Thanks. My final question before I jump back to the queue is that if I could have a follow-up question on your longer-term outlook. What are you seeing the potential opportunity in addition to your existing display driver IC, SOC, analog, and memory business? With growing China competition, are you concerned your positioning as the niche second supplier? Thank you so much.
Yeah. I think the China competition is for everybody. The only thing we can do is, we are going to increase our product value added and also invest for the automation and simplify the process in order to reduce our cost structure and maintain our profitability and maintain our competition. So far, so good.
Okay. Thank you so much. I will be back in the queue.
Operator. Our second question comes from Stanley Wang from SinoPac.
Stanley Wang, analyst, SinoPac. How do you see the revenue ratio for 1H and 2H?
Jesse Huang, Spokesperson and Senior Vice President, Strategy and Investor Relations. In last quarter's earnings call, our CFO gave 47:53. We think this number could be similar.
Stanley Wang, analyst, SinoPac. Do you think the UT rate for the second quarter would reach 70%?
S.J. Cheng, Chairman and President. Almost in the range.
Stanley Wang, analyst, SinoPac. It looks like your depreciation didn't increase too much, but the operating cost increased a lot. Does it imply you're encountering higher material cost pressure? If yes, could it be transferred to your customers?
S.J. Cheng, Chairman and President. Gold material cost for bumping has a formula which could be shared between ChipMOS and customers. However, the assembly gold wire cost would not be.
Stanley Wang, Analyst, SinoPac. Further, you mentioned about capacity expansion in 2H. Would it be possible to have contracts with customers?
S.J. Cheng, Chairman and President. Basically, we would move in this way since we have lots of experience in this kind of business model.
Stanley Wang, Analyst, SinoPac. In the script, you mentioned about stable demand from automotive in Q2. Please give us more color for other applications.
Jesse Huang, Spokesperson and Senior Vice President, Strategy and Investor Relations. Smart mobile likely gradually bottoming out and TV demand favored by domestic and oversea customers.
Stanley Wang, Analyst, SinoPac. Based on your current financial data, your CapEx in Q1 is still relatively lower. Please give us more color about whole year CapEx and depreciation.
Silvia Su, Vice President, Finance and Accounting Management Center. As our Chairman just mentioned, we should have higher CapEx in 2H. The percentage to annual revenue would be an increase from 15%-16% up to 18%-19% in 2024. On the basis of 1Q 2024, the depreciation rate would increase around 1%-3% quarterly. Echo to Jesse's reply to your question about 1H and 2H ratio, it would be roughly 47:53.
Operator. Our second question comes from Michael Hsu from Yuanta.
Michael Hsu, Analyst, Yuanta. How is your price pressure for currently and 2H?
S.J. Cheng, Chairman and President. Generally speaking, it is stable. Our only concern is whether we can transfer the increased material cost to customers.
Michael Hsu, Analyst, Yuanta. Do you think you can still maintain your price position even under lower price competition from Chinese competitors?
S.J. Cheng, Chairman and President. Again, China player competition is for everybody. We would focus on the high-end product segment, for example, OLED, automotive, and high-end TV. We also gain share from Chinese customers targeting market demand outside China.
Operator. Thank you. I am not showing any further questions in the queue. I would like to turn the call back over to G.S. Shen.
G.S. Shen, Technical Deputy Director, Strategy and Investor Relations. 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.
S.J. Cheng, Chairman and President. Thank you everyone for joining our conference call. Please email our IR team if you have any more questions. We appreciate your support. Goodbye.
Operator. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.