ASE investing NT$12.5bn on new fab

Advanced Semiconductor Engineering 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 the pace with high demand for system-in-a-package (SiP) services.The rapid proliferation of the 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,” ASE chairman Jason Chang told a media gathering.

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.

ASE, 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, ASE said.

ASE and SPIL shares were scheduled to be delisted from the local stock market on April 30, while the new entity created by their merger, ASE Industrial Holding Co (???????), shares were 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 ASE’s scale and cultivate talents, giving an edge to combat industrial entrants, Chang said.

Asked about the growing threat from Chinese 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.