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ASE says scarcity of some metals is driving prices up

Advanced Semiconductor Engineering Inc (日月光半導體), the world's second-largest chip packager, said yesterday that its prices are rising on scarcity of metals that it uses as raw materials.

The Kaohsiung-based company will pass on to customers cost increases for metals such as copper, nickel and gold, spokesman Freddie Liu (劉英武) said.

The company's plan to transfer the cost burden to customers was first reported yesterday by a Chinese-language newspaper. Advanced counts among its larger customers Motorola Inc, Qualcomm Inc, Agilent Technologies and Conexant Systems Inc.

The company expects to maintain its profit margin because a unit that trades and processes metals accounts for about 60 percent of its material supplies.

Advanced Semiconductor will raise prices on a "case-by-case" basis and can't estimate how much average prices will rise, Liu said.

Semiconductor packagers cut chips from silicon wafers, attach metal wires to the chips and encase the assembly in insulating materials such as plastic.

Metal prices have surged on strong demand from China. Copper prices rose 0.2 percent to an eight-year high of US$1.401 a pound in electronic trading on the Comex division of the New York Mercantile Exchange. The May futures contract soared 3.9 percent in New York on Monday.

Gold may average 13 percent higher, or about US$410 an ounce this year, the Australian Bureau of Agricultural and Resource Economics said. Gold futures rose as much as 0.6 percent to US$401.90 an ounce in electronic trading on Comex. The April contract was trading at US$400.7 at 11am in Hong Kong.

Nickel prices, which this year rose to a 15-year record, may lead gains in metal prices this year as soaring demand sends inventories to a record low, the Australian government's commodity forecaster said yesterday.

The shares of Advanced Semiconductor, the nation's largest chip packager, rose NT$0.90, or 2.4 percent, to close at NT$38.80 on the TAIEX. The shares have gained 11 percent since Jan. 1 compared with an 18 percent gain for the index.

Demand for chip packaging has soared after the semiconductor industry rebounded from a three-year slump. The company last month posted a third straight quarter of profit..
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