ASE reportedly to acquire Kyushu IC assembly and test facility from NEC

Taipei, Dec. 29, 2003 (CENS)--Advanced Semiconductor Engineering Inc. (ASE), Taiwan's largest provider of IC packaging and test services, reportedly plans to acquire an rear-section IC packaging and test facility in Japan in a bid to strengthen its business deployment in the market.

ASE said it's mulling taking over an IC packaging and test plant from a Japanese integrated device manufacturer (IDM) company to further boost its capacity in a rapid and effective way, but all relevant details are still under evaluation.

Industry sources said that ASE might plan to acquire a targeted IC assembly and test facility in Kyushu of Japan from NEC. With the added capacity, the sources added, ASE is expected to expand its leading gap over major rival Amkor Technology Inc. in the Asian market.

ASE gained a solider foothold in Japan this year by winning increasing contract business from NEC and Oki Electric Industry Co., Ltd. And the Japanese business recovered rapidly. Industry sources said, ASE is actively planning to set up a base in Japan to compete with Amkor, which formed a joint venture with Toshiba and took over Toshiba's IC assembly and test facility in late 2000.

ASE acquired ISELab, an IC testing company of the U.S., in 1999. In the same year, ASE also acquired Motorola's IC assembly and test facilities in northern Taiwan and South Korea to further expand its operation scale and market share.

As the global IC industry recovered rapidly this year, many international IDMs have been increasing their orders for contract IC assembly and test business with contract partners. To maximize their semiconductor production capacity and cut operation costs, the international IDMs have also been actively trying to sell their IC assembly and test facilities.

According to local IC assembly and test companies, several Japanese IDMs recently visited local IC assemblers and testers, including ASE and Siliconware Precision Industries Co., Ltd., trying to sell them IC assembly and test facilities. The Japanese companies, the local IC assemblers said, however, often offer not-so-good terms for the possible acquirers, including bans on cutting employees within two or three years and/or changing production lines within one or two years etc., constituting difficulties for possible acquisitions.

With such strict terms from Japanese sellers, local possible acquirers are still intensively evaluating the feasibility of taking over the facilities in Japan as the labor costs there are much higher than in Taiwan.