Amkor expects sustained higher demand in Taiwan

Amkor Technology Inc, the world's No.2 semiconductor tester and packager, said yesterday that it will continue to invest heavily in Taiwan as demand from local chipmakers still outpaces that of their Chinese peers.

"We're staying in Taiwan because Taiwan has the leading edge in foundries. ? China is still an emergent and shifting market, though the growth rate will be bigger due to the lower base," said Eelco Bergman, senior vice president of Amkor.

As Chinese chipmakers are only capable of producing low-end chips for consumer electronics such as televisions, Bergman said that, realistically, it will take five to 10 years for China's market to outpace Taiwan's in terms of size.

Amkor, which has only captured 10 percent of the local market, plans to spend US$100 million this year to expand capacity, partly through the acquisition of local smaller chip testers and packagers.

In its latest move, Amkor bought a 60-percent stake in Unitive Semiconductor Taiwan Corp (悠立半導體), which will help the company tap into computer chips. In March, Amkor acquired First International Computer Testing and Assembly Technology Corp (眾晶科技), based in Hsinchu.

Amkor also plans to spend a combined US$100 million to expand facilities in China and Singapore this year, but no further investment has decided yet, according to Ying Chang (張英修), vice president of Amkor's Taiwan affiliate.

"Chinese chipmakers still need another two to three years to improve their capability in producing high-end chips," Chang said.

Amkor currently has one factory in Shanghai, but the capacity is about one-eighth of the company's Taiwan plants, Chang said.

Amkor began providing testing and packaging services to China's largest chipmaker Semiconductor Manufacturing International Corp (SMIC, 中芯國際集成電路) last year, but most of its clients are from the US and Europe.

As Amkor started its Chinese operation in 2001, Taiwan's Advanced Semiconductor Engineering Inc (日月光半導體), the world's No.1 chip tester and packager, and smaller competitor Siliconware Precision Industries Co (矽品), are calling on the government to lift restrictions on local semiconductor companies to allow them to set up factories in China, citing a need to maintain competitiveness.

"As long as their wafer foundry clients such as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) have already started producing chips there, they've got to be there," said Patrick Wang (王文宏), an analyst with Yuanta Core Pacific Capital Management (元大京華投顧).