The world’s biggest chip packager, Advanced Semiconductor Engineering Inc (ASE, 日月光), yesterday formed a supply chain management alliance with hundreds of local component makers in a bid to better control its inventory to cope with volatility in the industry.
The move came after the industry rebounded from a severe industrial slump amid improving global economies and recovering demand for electronics. Excessive inventories have been blamed for previous downturns in the industry.
About 250 of ASE’s partners in the chip testing and packaging supply chain joined the alliance, including chip testing and packaging service provider Orient Semiconductor Electronics Ltd Co (華泰電子), printed circuit board (PCB) maker Unimicron Technology Corp (欣興電子) and Nan Ya Printed Circuit Board Corp (南亞電路板).
“We have learned a good lesson from the economic recession ... Our revenue was very good during the past slump, while inventories fell to a very low level,” Hope Chen (陳榮宏), a department manager of ASE’s procurement division, said on the sideline of the launch of the alliance.
“We realized that [to make profits,] we have to closely monitor not only demand, but also [component] supply. Component suppliers have responded slowly [to the market situation] because of limited information,” Chen said.
The alliance would in part serve as a platform for information exchange, which would give component suppliers a clearer picture of market trends and better control of their capacity, Chen said.
Suppliers in the alliance would be able to shrink their time to market by 30 percent via the platform, he said.
“All in all, the supply chain will become healthy,” Chen said.
The alliance was formed with the support of the Ministry of Economic Affairs’s commerce department and the non-profit organization Supply Management Institute, Taiwan (中華採購與供應管理協會).
“We believe this alliance will help local firms enhance their inventory management capability and better cope with rush orders, which usually come during economic recessions,” said Yeh Yun-lung (葉雲龍), director-general of the Commerce Department.
ASE’s local rival Siliconware Precision Industries Co (矽品) has not joined the alliance yet, but Yeh said the company would become a member soon.
Siliconware Precision shares about 80 percent of its component suppliers with ASE.
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