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ASE Technology to sell Suzhou unit stake to Tsinghua Unigroup

2018/08/11 16:04:21

Taipei, Aug. 11 (CNA) Taiwan-based ASE Technology Holding Co., the world's largest integrated circuit packaging and testing services provider, has agreed to sell a stake in its Suzhou subsidiary to Tsinghua Unigroup, a Chinese IC giant backed by Beijing authorities.

In a statement released Friday, ASE Technology said it will sell a 30 percent stake in Suzhou ASEN Semiconductors Co. to Tsinghua Unigroup for about US$95.33 million, with the deal expected to be concluded in 10 days.

That will leave ASE Technology with a 70 percent stake in the Suzhou company.

ASE Technology said the sale is aimed at building a strategic partnership with Tsinghua Unigroup to help it penetrate China's fast-growing semiconductor market.

The proceeds will be used by ASE Technology as working capital and for its future investments in Taiwan, the company said.

Suzhou ASEN was founded in 2007 as a joint venture between Advanced Semiconductor Engineering Inc. (ASE), now a unit of ASE Technology, and Netherlands-based NXP Semiconductors, to provide IC packaging and testing services in China.

ASE had a 60 percent stake and NXP 40 percent, but ASE bought back the 40 percent stake from NXP in March 2018 to take the Suzhou unit fully under its corporate umbrella.

ASE Technology officially began operations at the end of April when the merger between ASE and smaller rival Siliconware Precision Industries Co. (SPIL) was completed.

The move was made to strengthen the new company's global competitive edge through larger economies of scale and also fend off investment overtures by Chinese companies such as Tsinghua Unigroup.

Despite the merger, ASE and SPIL operate as independent companies but they have been delisted from the Taiwan Stock Exchange, replaced by ASE Technology, which started to sell its shares on April 30.

Analysts said Tsinghua Unigroup -- an opaque holding company seen as acting on behalf of China's government to obtain semiconductor production technology -- is keen to expand its portfolio of chip technologies in a wide range of fields, including communications, the internet of things and radio frequency identification.

The partnership is also expected to help ASE Technology secure orders from the Chinese group's units, analysts said.

Having Tsinghua Unigroup as a shareholder will diversify Suzhou ASEN's ownership, which is expected to increase the odds of the Suzhou subsidiary listing in China.

Another subsidiary of ASE Technology, Universal Scientific Industrial (Shanghai) Co., has been selling shares on the Shanghai Stock Exchange since February 2012.

According to data posted by ASE Technology on the TWSE website, the group currently operates production bases or marketing offices in China in Shenzhen, Kunshan, Weihai of Shandong, Suzhou, Shanghai and Wuxi.

(By Chung Jung-feng and Frances Huang)