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Formosa Plastics, ASE get go-ahead for PRC investment

Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), the world's biggest chip packager, yesterday obtained the government's approval to invest additional US$30 million on a Chinese factory to expand capacity amid rising demand.

That is part of the latest batch of China-bound investments granted by the Ministry of Economic Affairs' Investment Commission.

Formosa Plastics Corp (台塑) also got the green light for its US$100 million yesterday to build a stainless steel plant in Changzhou in China's Fujian Province through a joint venture, in exchange of a further NT$813.3 billion (US$25.7 billion) investment at home.

"Both investment projects are positive for Taiwan's economic development," Minister of Economic Affairs Steve Chen (陳瑞隆) told reporters after a commission meeting yesterday.

ASE planned to spend the new capital on expanding capacities on its Chinese plant in Shanghai, in order to meet customer demand, company spokesman Freddie Liu (劉詩亮) said by phone.

"We are grateful about the government's approval," Liu said. "It will be even better for the government to allow us to provide services for customers on more advanced technologies in China as demand is rising gradually."

The latest approval strengthened ASE's confidence on another Chinese-bound investment proposal totaled US$7 million by the first half of this year, Liu said.

ASE said last month that it planned to buy out a China-based chip packager Aimhigh.

The deal will be the second buyout after ASE bought Global Advanced Packaging Technology Ltd (威宇科技) for US$60 million in 2006.

"This [government's approval] certainly will have a positive impact on ASE.... ASE's revenues growth recently is largely coming from acquisitions," said Kenneth Yang (李克揚), a semiconductor analyst with Primasia Securities based in Taipei.

Yang, however, said he would not see the approval as a precursor for further relaxation on the nation's semiconductor companies.

Late 2006, the government lifted the ban on local chip testing and packaging service providers to offer services for low-end technologies in China after prolonged evaluation.

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