Semiconductors and Components

Chinese Bid for STATS ChipPAC Falters

02 September 2014

The Singapore state-backed STATS ChipPAC Ltd. – a supplier of semiconductor packaging design, bump, probe, assembly, test and distribution services – appears to have avoided being acquired by acquisitional Chinese companies but remains a likely target.

In May and June of 2014 loss-making STATS ChipPAC announced that parties had made contact about a possible acquisition and last week confirmed that two of those parties were Jiangsu Changjiang Electronics Technology Co. Ltd. (Jiangyin, China) and Tianshui Huatian Technology Co. Ltd. (Tianshui, China).

On Monday, Sept. 1, STATS ChipPAC reported that Huatian had announced its decision to terminate its approach and that JCET had announced that is discussions were still at a preliminary stage and that there was now a "low likelihood" of reaching an agreement on acquisition within the next three months.

STATS ChipPAC is 83.8 percent owned by Temasek Holdings (Private) Ltd., through its wholly-owned subsidiary, Singapore Technologies Semiconductors Pte Ltd. Temasek is owned by the Singapore Government through the Minister for Finance. The company has been making financial losses for several quarters.

The company made a net loss of $4.2 million on revenue of $409.9 million in the second quarter of 2014 following on from a loss of $15.8 million on revenue of $365.5 million in the first quarter. For the full year of 2013 the company made a net loss of $47.5 million on revenue of $1.60 billion.

Singapore has operated an economic policy that focused on electronics manufacturing for many years. It included the creation and fostering of foundry Chartered Semiconductor Manufacturing Ltd., which Singapore sold in 2009 for $3.9 billion. Chartered was folded into Globalfoundries Inc. As a packager of ICs STATS ChipPAC is a complementary operation to foundries but Singapore is probably ready to let go if the price is right.

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