Wed, Nov 29, 2006 - Page 12 News List

ASE chairman shrugs off speculation

GLOBAL VISION Following a meeting with the government, ASE's chairman said the firm wanted to play a role in the worldwide consolidation of semi-conductor companies

By Jessie Ho  /  STAFF REPORTER

The proposed buyout by a Carlyle-led consortium of Advanced Semiconductor Engineering Inc (ASE, 日月光半導體) may prompt the government to tackle the long-standing China-bound investment problem, but the buyout target yesterday downplayed those concerns, saying the deal was aimed at expanding its business scale.

"There are too many semiconductor companies worldwide and they need to be gradually integrated to create economies of scale," said ASE chairman and CEO Jason Chang (張虔生).

"We want to play a positive role in the wave of consolidation," Chang said after a meeting with Minister of Economic Affairs Steven Chen (陳瑞隆) yesterday morning.

Gregory Zeluck, managing director of Carlyle Group also joined the meeting.

Chang shrugged off speculation that ASE was trying to bypass the government's China-bound investment restrictions by means of the deal, saying that the company's investment in China did not comprise even 10 percent of the company's net worth.

"We still place high emphasis on Taiwan as 75 percent of our revenues are generated here by our 20,000 local employees," Chang said.

If ASE is purchased, it has no plan to list on overseas stock markets, but would not ignore the possibility of re-listing on Taiwan's bourse, he said.

The government currently caps Taiwanese companies' China-bound investment at 40 percent of their net worth, a restriction that companies have long called on to be loosened.

Chen said the restriction did not have any direct link to the potential ASE-Carlyle deal, but added that the ministry would review the policy and help companies to cushion the impact, Chen said.

The Carlyle Group's buyout offer for ASE may not progress smoothly, as the offering price was widely considered to be low.

Shares of the world's biggest semiconductor packaging and testing services provider rose by the 7 percent daily limit on Monday, but weakened by 0.66 percent to close at NT$37.7 (US$1.15) on the Taiwan Stock Exchange yesterday.

ASE's American depositary receipts (ADRs) soared to US$6.06 last Friday on the New York Stock Exchange, but were at US$5.91 on Monday.

The prices are still close to Carlyle's offer of NT$39 per share, or equivalent to approximately US$5.94 per ADR. Carlyle planned to buy all of ASE's outstanding common shares.

In April, the government gave permission for chip testing and packaging companies to set up factories in China, although no applications have been passed to date.

ASE's smaller rival Siliconware Precision Industries Co (矽品精密) applied for an operating testing and packaging business in China in May, but was rejected.

ASE submitted an application to the ministry's Investment Commission last month, hoping to establish operations in China, said Emile Chang (張銘斌), the deputy executive secretary of the commission.

The commission will discuss the application with various government departments, including the Mainland Affairs Council, and make its final decision by the end of January at the latest, Chang said.

Meanwhile, the Financial Supervisory Commission said yesterday that the Taiwan Stock Exchange Corp (TSE) is reviewing data collected by its share price screening mechanism to determine if there were unusual trading activities in ASE shares before the disclosure of the buyout offer.

TSE will require ASE to further explain the disclosed information if it was necessary, the commission's spokesperson Susan Chang (張秀蓮) said.

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