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June 27, 2017

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Brazil investment plan under discussion: Taiwanese IC company

Taiwan-based Advanced Semiconductor Engineering Inc. (ASE 日月光), the world's largest integrated circuit packaging and testing firm, said Thursday that an investment plan in Brazil remains under discussion.

ASE's comments came after local media reported that it has joined forces with Qualcomm Inc., a U.S. smartphone chip designer, to build an IC packaging and testing plant in Brazil.

The Chinese-language Commercial Times cited sources close to the deal as saying that ASE and Qualcomm have signed a memorandum of understanding (MOU) with the Brazilian government for the investment plan, in which the two IC giants aim to build a production site in Sao Paulo, the country's largest city.

In response to the report, ASE said that the MOU was inked on March 8 but is not binding.

ASE said that the investment plan needs further discussion, adding that after the parties in the deal reach a formal agreement, the IC firm will disclose the details about the investment to investors in accordance with the rules in the local equity market.

In the report, the sources said that ASE, Qualcomm and the Brazilian government are planning to invest US$200 million in the Sao Paulo plant in the initial phase.

The planned production complex will be located in Sao Paulo's Campinas, where South Korea's Samsung Electronics Co. and China's Lenovo Group Ltd. (聯想) have plants, the report said. The report added that the new plant targets the fast-growing smartphone market in Brazil, which has a population of more than 200 million.

The report added that the Brazilian government has come up with preferential measures to attract foreign investors, which is why ASE and Qualcomm have decided to go there. In addition to Taiwan, ASE has footholds in several countries such as Malaysia, Japan, South Korea, China, Singapore and the United States, according to the company's website.

The Brazil investment is expected to allow ASE to have a comprehensive global investment roadmap, the sources said in the report, adding that the Sao Paolo plant is expected to focus on IC packaging and testing services for high-end smartphone chips and chips used in the Internet of Things. The sources said that if the investment plan proceeds smoothly, the Brazilian plant will become operational in 2018.

Despite the investment plan, shares of ASE remained in the doldrums in line with the broader market, down 0.13 percent at NT$39.40 (US$1.29) on the Taiwan Stock Exchange as of 11:29 a.m.

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