Thu, Aug 30, 2012 - Page 14 News List

ASE executive brushes off talk of rivalry with TSMC

TESTING TIMES?The ASE executive was responding to reports that TSMC has recently recruited engineers to set up its own 400-person packaging and testing team

Staff writer, with CNA And Bloomberg

Advanced Semiconductor Engineering Inc (ASE, 日月光半導體) has brushed off concerns of a potential rivalry with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) amid reports the Taiwanese chipmaker has put together a large team to make further inroads into ASE’s main market.

A senior executive with ASE, the world’s largest integrated circuit packaging and testing vendor, told the Central News Agency on Tuesday that the company hopes to have a “symbiotic” relationship with TSMC and that it would also expand into the flip-chip and wire-bonding sectors.

The executive, who requested anonymity because of not being authorized to speak publicly on the issue, said ASE would also increase its capital expenditure and investment in research and development to strengthen its market competitiveness.

Local media reported earlier this month that TSMC, the world’s largest contract chipmaker, had recently recruited engineers — many reportedly from ASE and Siliconware Precision Industries Co (矽品精密) — to establish its own 400-person packaging and testing team.

TSMC has been involved in the sector through investments in other companies, but this would be the chipmaker’s most aggressive foray into packaging to date, raising questions about whether it might eventually challenge ASE and Siliconware, which is the second-biggest company in the field.

Though the executive did not define how the symbiotic relationship between ASE and TSMC might evolve, he said he expected TSMC would invest more in testing and packaging over the next 10 years because capital expenditure in the core chipmaking industry is likely to fall.

The global average capital expenditure in chip making is about US$25 billion annually, while average capital expenditure in integrated circuit packaging and testing is about US$5 billion, the executive said.

Separately, Apple Inc and Qualcomm Inc were rebuffed in separate attempts to invest cash with TSMC in a bid to secure exclusive access to smartphone chips, people with knowledge of the matter said.

Both proposals included investments, each of more than US$1 billion, for TSMC to set aside production dedicated to making chips exclusively for them, said the people, who declined to be identified because the details are not public.

While TSMC is Qualcomm’s biggest supplier, the Taiwanese firm has been successful because it has worked with multiple customers. Dedicating one facility to a single product or customer creates the risk of a fabrication plant becoming a burden if the product, client or technology changes, TSMC chief financial officer Lora Ho (何麗梅) said in an interview on July 19.

“You have to be careful. Once that product migrates, what are you going to do with that dedicated fab?” Ho asked. “We would like to keep the flexibility.”

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