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May 30, 2017

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Chinese buy-out of Singapore firm won't hit local IC packaging: analysts

TAIPEI--The possible buy-out of Singapore-based integrated circuit packaging and testing provider STATS ChipPAC Ltd. by a Chinese competitor is unlikely to affect Taiwanese firms' competitive edge in the global market for the services, analysts said Saturday.

The top two local IC packaging and testing firms — Advanced Semiconductor Engineering Inc. (ASE) and Siliconware Precision Industries Co. — have boasted a lead over their peers in high-end technology, and any immediate acquisition of STATS ChipPAC would be unlikely to have a major impact.

ASE and Siliconware rank as the world's largest and third largest IC packaging and testing services providers, respectively. U.S.-based Amkor Technology Inc. is the second largest.

Speculation has mounted in the market that China's Jiangsu Changjiang Electronics Technology Co. and Tianshui Huatian Microelectronics Co., Ltd. are competing with each other to acquire STATS ChipPAC.

According to a report from Bloomberg, the acquisition deal, which would be valued at about US$1 billion, is expected to be completed in September. STATS ChiPAC is currently the fourth largest IC packaging and testing services firm in the world, which currently runs production lines in Singapore, Taiwan, South Korea and China.

Local industry sources said that the acquisition speculation is not unfounded, as China has been keen to boost its visibility in the industry at the same time that loss-incurring STATS ChipPAC has been eagerly seeking a buyer for two years.

A guidance released in June by Chinese authorities on the development of the country's semiconductor industry showed that China is determined to strengthen its mid and high-end technology in the IC packaging and testing business.

Sources said it is more likely for Changjiang Electronics to win the bid for STATS ChipPAC as the deal would bring more synergy because the two companies have complementary product and customer portfolios.

However, sources said that even if the deal goes through, Changjiang Electronics will have to go through a period of adjustment to narrow down the cultural differences with STATS ChipPAC.

They added that it is possible that the Singapore firm's customers may even shift their orders to Taiwan due to a lack of confidence in China's technology.

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