Siliconware Precision Industries Co (SPIL, 矽品精密), the world’s No. 3 chip packager, yesterday said its strategic alliance with Hon Hai Precision Industry Co (鴻海精密) would help it expand its customer base to electronics vendors, prompting speculation that Apple Inc is on the shortlist of SPIL’s new clients.
SPIL’s comments came amid widespread concerns that ITS board on Friday accepted a proposal from Hon Hai to sell a 21.2 percent stake to Apple’s major assembler of iPhones and iPads at a lower price of NT$40.3 per share via a share-swap, rather than the NT$45 per share in a cash tender offered from its bigger rival Advanced Semiconductor Engineer Inc (ASE, 日月光半導體).
“Our strategic cooperation aims to develop new technologies, which have a competitive edge. Among them, we expect our cooperation in system-in-a-package [SiP] business will bear fruit within a year,” SPIL chairman Bough Lin (林文伯) told investors yesterday during a teleconference.
“This is a huge business opportunity,” Lin said.
“Hon Hai is good at providing electronics manufacturing services, which will help SPIL broaden its customer base to electronics vendors from existing chip designers. That is what SPIL lacks,” he said.
Smartphone, Internet of Things and wearable devices are the target markets for SPIL to provide SiP services, Lin said.
When asked by Daiwa Capital Markets analyst Rick Hsu (徐稦成) whether SPIL is to provide SiP services to Hon Hai’s biggest customer, Apple, Lin said his company would assist Hon Hai in meeting customer demands.
That implies that SPIL might secure new orders from Apple via its cooperation with Hon Hai within the next 12 months.
SPIL lags behind ASE in expanding into the SiP business, primarily because the company was unable to generate substantial profits by offering cost-efficient services for clients, Lin said.
“However, collaborating with Hon Hai will give us some advantages as we can reduce costs in component sourcing and in boosting factory automation due to its strong bargain power,” Lin said.
Lin said the deal with Hon Hai would help boost SPIL’s book value by NT$5 per share, as SPIL would book NT$25 billion (US$761.96 million) in paid-in capital from its holding of a 2.2 percent share of Hon Hai via the share-swap.
SPIL is to issue 840 million new shares, with the company’s capital shares expected to increase 2 percent and to decrease earnings per share by 12 percent by next year, Lin said.
The transaction is expected to be completed on Dec. 1, Lin said.
The new share offering is pending shareholder approval and an extraordinary shareholders’ meeting is scheduled for Oct. 12.
Lin said the merger with ASE would not effect synergy, as 85 percent of its customers overlapped with that of ASE.
The merger could mean order losses, as customers might be concerned about relying on a single company to provide both chip packaging and testing services, he said.
He also said that ASE’s price offer of NT$45 per share is unreasonably low, as any hostile takeover bid usually pays a 42.5 percent premium for a controlling stake based on related rules.
ASE’s offer represents about a 34 percent premium.
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