Fri, Jun 27, 2014 - Page 14 News List

ASE considers increasing capex to meet demand

FUNDRAISING:Shareholders approved plans for a rights issue and an overseas bond or GDR issue to raise funds to finance its capacity expansion and repay its debts

By Lisa Wang  /  Staff reporter

Advanced Semiconductor Engineering Inc (ASE, 日月光半導體), the world’s largest chip packager, yesterday said it was considering raising its capital expenditure this year for the second time due to strong customer demand.

“Our current capacity is not enough to satisfy our clients’ orders,” the Chinese-language Apple Daily’s online news site quoted ASE chief operating officer Tien Wu (吳田玉) as saying after the company’s annual general meeting.

“ASE will be flexible about its capacity expansion, aligning it with market demand,” Wu said.

The company expects to be running at full capacity in the next two quarters, as customers are launching new products, he said.

Two months ago, ASE increased its forecast capital spending by 35.71 percent to US$950 million from US$700 million.

Earlier this month, rival Siliconware Precision Industries Co (矽品) announced that it was raising its forecast capital expenditure for this year to NT$18 billion (US$600 million) from NT$14.7 billion.

Wu said that revenue contribution from its system-in-package (SiP) business this year would outgrow last year, when SiP sales soared 34 percent annually to US$1 billion, according to the company’s annual financial report.

ASE provides SiP services for fingerprint sensor chips used in Apple Inc’s iPhone 5.

Wu considers this business a major growth driver for the company over the next three to five years.

ASE shareholders yesterday approved the company’s plan to raise funds by issuing up to 500 million new common shares and NT$15 billion in overseas corporate bonds or global depositary receipts (GDR), with the proceeds being used to finance this year’s capacity expansion, repay debt and replenish its working capital.

Shareholders also gave the go-ahead to distribute a cash dividend of NT$1.30 per share from last year’s net profit of NT$15.69 billion, or NT$2.09 per share.

That translates into a dividend yield of 3.39 percent based on the stock’s closing price of NT$38.40 yesterday.

The company’s partially closed K7 plant in Greater Kaohsiung due to water pollution problems cut its core business revenue by about 5 percent last quarter.

In April, ASE chief financial executive Joseph Tung (董宏思) said the impact from the plant’s partial shutdown was diminishing.

Wu did not say when the plant would resume full operation.

He said ASE has been working hard to follow the Greater Kaohsiung Government’s guidance to improve the environment at the K7 plant.

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