ASE investing NT$12.5bn on new fab

BOOKED: The firm said its factories are fully utilized even after the merger with SPIL, which means concerns that the merger would undermine demand were unfounded

By Lisa Wang / Staff reporter, in KAOHSIUNG





Advanced Semiconductor Engineering Inc (ASE, 日月光半導體) yesterday said it is investing NT$12.5 billion (US$429 million) on a new advanced fab in Kaohsiung to expand capacity, with the aim of keeping up pace with high demand for system-in-a-package (SiP) services.

The rapid proliferation of slim Internet of Things devices is driving demand for SiP packaging technology, which encloses several chips, such as microprocessors and memory chips, in a single module, the world’s largest chip tester and packager said.

“Our factories are fully utilized [even] after the consolidation of ASE and Siliconware Precision Industries Co (SPIL, 矽品精密),” ASE chairman Jason Chang (張虔生) told a media gathering.

Officials and company executives, including Advanced Semiconductor Engineering Inc (ASE) chairman Jason Chang, third left, and Kaohsiung Mayor Chen Chu, fourth left, break ground for ASE’s new integrated-circuit factory in Kaohsiung’s Nanzih District yesterday. Photo courtesy of Advanced Semiconductor Engineering Inc

“This proves that the concern that the combination of the two firms would undermine ASE’s customer base and reduce client orders is unfounded,” Chang said.

“We are still scouting for new land in areas adjacent to existing plants to further expand capacity,” Chang said.

The company early this year said it has seen capacity become scarce, due to improving demand for a wide range of products and a boost from rising demand for cryptocurrency mining machines.

The capacity at another new fab, dubbed K24, has been fully booked and the factory would not start manufacturing any products in the first quarter of next year, ASE said.

The latest K25 fab is expected to start production in about two years, primarily for SiP services, ASE said.

K25 would generate NT$10 billion in revenue when it is 100 percent utilized, the company said.

ASE and SPIL shares are scheduled to be delisted from the local stock market on April 30, while the new entity created by their merger, ASE Industrial Holding Co (日月光投資控股), shares are to be traded on the nation’s main board on the same day.

The two companies are to continue to operate independently under their current management teams.

The merger helps enlarge the company’s scale and cultivate talents, giving an edge to combat industrial entrants, Chang said.

Asked about the growing threat from Chiense rivals, Chang said that China might have deep pockets to invest on the semiconductor industry, but it cannot create a big pool of talent overnight.

ASE and SPIL have 68,000 personnel in total.

Commenting on trade tensions between the US and China, Chang said he believes that it will end “peacefully.”

US President Donald Trump uses the trade deficit and tariffs against China as bargaining chips to negotiate better deals, he said.

The trade dispute between the world’s two largest economies will not constitute a sufficient reason for ASE to build a new labor-intensive production line in the US, given the lack of workers, Chang said.

Instead, ASE prefers investing on building an operation with strong technological capabilities, such as a chip testing lab that ASE operates in California, he said.

Commenting on whether ASE would join the trend of listing the shares of its subsidiaries on China’s A-share market, Chang said it is evaluating the possibility of spinning off new businesses and trading their shares in China.

Hon Hai Precision Industry Co (鴻海精密), a major assembler of Apple Inc’s iPhones, has won approval from Chinese regulators to list the shares of its subsidiary Foxconn Industrial Internet Co (富士康工業互聯網) on the A-share stock market.