Advanced Semiconductor Engineering Inc (ASE, 日月光半導體) has decided that an overseas corporate bond sale plan worth US$400 million is not to proceed in the wake of uncertainty in the global capital market, which could affect the deal’s financial terms.
ASE, the world’s largest integrated circuit packaging and testing services provider, said that as the global semiconductor industry has entered a slow season in the fourth quarter, the company has lower-than-expected fund demands at the moment.
ASE said that it would be able to use disposable funds it owns and other fund sources to meet the needs of its day-to-day operations.
As of the end of the third quarter, ASE had NT$32.97 billion (US$1.04 billion) in cash and cash equivalents, compared with NT$45.03 billion recorded at the end of December last year.
In October, ASE announced a plan to issue up to US$400 million in secured overseas corporate bonds, and had tentatively set a coupon rate of zero and a maturity of five years for the purchase of raw materials for production overseas.
Market analysts said that as the US Federal Reserve in October announced an end to its six-year quantitative easing program and the market has widely expected the Fed to raise its key interest rates by the middle of next year, borrowing costs in the global market have been on the rise.
Analysts said that since ASE has been gearing up to expand its capacity this year by using large capital expenditures, it is not urgent for the company to raise more funds to shoulder higher borrowing costs.
This year, ASE’s capex totaled about NT$29.1 billion to meet rising demand for mobile devices. Market analysts expect ASE to become one of the suppliers to Apple Inc.
They anticipate that ASE is to spend an additional NT$20 billion in capex next year for expansion.
ASE said that despite the effect of the slow season, market conditions remain stable, and added that the global semiconductor industry could continue to grow at a steady pace next year.
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