Two Taiwanese Chip Assemblers Approved to Invest in China

Taipei, May 20, 2008 (CENS)--The Ministry of Economic Affairs (MOEA) recently approved Powertech Technology Inc.'s plan and Advanced Semiconductor Engineering Inc.'s (ASE's) plan to fund investment projects in mainland China.

With the permission, Powertech will invest US$100 million to open a brand-new test and packaging factory in southern or central China to keep up with rising demands from memory-module maker Kingston Technology and other customers in the mainland.

ASE is ratified to put US$90 million into expanding an operating factory in Shanghai to keep it advantageous in the intensifying competition in the mainland's test and packaging market.

Powertech Chairman T.K. Tsai pointed out his company would plow the enormous capital into the mainland to open the facility because it needs a huge manufacturing capacity in the mainland to cope with go-go demands from European and Japanese customers operating in the mainland.

Powertech is Taiwan's No.1 test and packaging house dedicated to memory chips. It is its first application for mainland-bound investment. People familiar with the company's investment project pointed out that the planned factory would acquire Kingston's test and packaging factory in Shenzhen once it is completed. Kingston's factory, named Payten, is receiving contracts from Hynix Semiconductor's factory in Wuxi of Jiangsu Province and Powertech.

In return for the government's green light to its investment plan, Powertech pledges to invest NT$8 billion (US$266 million at US$1:NT$30) over next few years to boost capacity at a factory in northern Taiwan, which was completed early this year, and increase 1,000 jobs.

Also, MOEA officials said Powertech planned to inject NT$20 billion (US$666 million) into Taiwan's operations and create 2,000 jobs in next stage of its investment plan.

For ASE, the commitment as return for government permission is to put a total of US$550 million into Taiwan's operation and increase high-ranking jobs for Taiwanese talents over next three years.

ASE put money into the Shanghai factory first time in June last year, with US$60 million. It added US$30 million to the factory in February this year. Now, it plans to inject US$90 million more into the facility. Industry watchers pointed out the world's No.1 test and packaging house had been eager to scale up the factory's output capacity in order to keep up with increasing orders from integrated device manufacturers (IDMs).

ASE executives pointed out the company's deployments in the mainland had yield results, inspiring their company to put more money into its mainland operations. They said the company would use a holding company it owns in third location to bankroll the mainland factory.