IC testing stocks surge on rumors of China easing

Shares of the nation's major chip testers and packagers yesterday rallied on speculation that the government was close to approving investments in China's fast-growing chip industry.

Shares of the world's top chip packager, Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), gained 1.48 percent to close at NT$44.45 (US$1.37), as the Chinese-language Commercial Times reported yesterday that the government might give the go-ahead to ASE's second Chinese investment plan, citing an unidentified source.

In February, ASE announced a plan to form a joint venture with NXP Semiconductors based on NXP's operation in Suzhou, China, after the company acquired Shanghai-based chip testing and packaging firm Global Advanced Packaging Technology Ltd (威宇科技) last year.

In addition to the sector's rosy prospects this year, "the government's approval will be another catalyst for investors to buy chip testing and packaging stocks," said an analyst surnamed Kuo at Grand Cathay Investment Services Corp (大華投顧).

The approval would also open a door for local firms to increase their foray into the Chinese market, helping them save costs, Kuo said.

The Investment Commission was unavailable for comment on the report as of press time.

China's semiconductor market is expected to expand by a compounded annual growth rate of 10.5 percent to US$122 billion in 2011, market research firm Gartner Inc said.

ASE's local peers Greatek Electronics Inc (超豐) and Walton Advanced Engineering Inc (華東科技) also saw shares rise on the news as they also have Chinese investment projects awaiting official approval. Greatek climbed 3.39 percent to NT$58 and Walton jumped 5.09 percent to NT$22.7.

Shares of Siliconware Precision Industries Co (矽品精密), the nation's second-biggest chip testing and packaging services provider, however, slid 1.79 percent to NT$71.2.