Thu, Sep 17, 2015 - Page 13 News List

SPIL sees sales boost from Hon Hai alliance

By Lisa Wang  /  Staff reporter

Hon Hai Precision Industry Co chairman Terry Gou, left, and Siliconware Precision Industries Co chairman Bough Lin yesterday shake hands at a press conference in Taipei where the two discussed their strategic alliance.

Photo: Liao Chen-huei, Taipei Times

Siliconware Precision Industry Co Ltd (SPIL, 矽品精密) chairman Bough Lin (林文伯) yesterday said he expects revenue contribution from the firm’s system-in-a-package (SiP) business to grow significantly in 2017 as its strategic alliance with Hon Hai Precision Industry Co Ltd (鴻海精密) would help broaden its customer base.

SiP revenue could reach NT$300 million (US$9.16 million) in the fourth quarter of this year, Lin said.

“The alliance with Hon Hai would create a strong growth driver for SPIL,” Lin told a media briefing, as the company is working to solicit shareholders’ support for its share-swap deal with Hon Hai.

“Hon Hai complements SPIL, as most of Hon Hai’s clients are system houses [electronic device makers], while SPIL provides services mostly to fabless [chip designers],” Lin said.

Last month, the two companies reached a share-swap agreement in response to an unsolicited NT$35 billion tender offer from bigger rival Advanced Semiconductor Engineering Inc (ASE, 日月光半導體) for a 25 percent stake in SPIL.

SPIL, the world’s No. 3 chip packager and tester, is scheduled to hold an extraordinary shareholders’ meeting on Oct. 15 to discuss the strategic alliance with Hon Hai, the world’s largest electronics manufacturing services provider whose clients include Apple Inc.

SPIL has been seeking potential partners among device manufactures for a tie-up since 2010 to expand its SiP business, as packaging technology is upgrading to system module packaging from traditional chip packaging, Lin said.

Forming a partnership with Hon Hai would help SPIL “to generate more revenues and profits from SiP,” he said. “We expect to seize a significant market share in 2018.”

In the initial stage, SPIL would provide SiP services used in fingerprint modules, Lin said.

Fingerprint scanner has become a standard feature of mid-to-high-end smartphones since Apple incorporated it in its iPhone 5S in 2013.

Hon Hai has also developed SiP technology via a subsidiary, ShunSin Technology Holdings Ltd (訊芯), which competes with ASE in securing SiP orders from Apple.

SPIL had made an acquisition offer for ShunSin before the latter went public in January, but Hon Hai does not plan to sell the unit, Hon Hai chairman Terry Gou (郭台銘) said at the media briefing.

“We believe the alliance between SPIL and Hon Hai will create a strong synergy,” Gou (郭台銘) said. “It is a growing trend to integrate more and more subsystem modules into packaging as electronics devices become smaller and thinner.”

Under the share-swap deal, SPIL plans to issue 840 million new common shares in exchange for 359 million shares of Hon Hai. That translates into 2.34 SPIL shares for each Hon Hai share. After the transaction, Hon Hai would become SPIL’s biggest shareholder, with a 21 percent stake.

Hon Hai also said that it is planning to issue up to NT$18 billion in corporate bonds to boost its working capital. The company’s board approved the plan on Tuesday, but did not set a time frame for the debt issuance.

The bond issue has nothing to do with its strategic partnership with SPIL, Hon Hai said.

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