Memorychip packager ChipMOS Technologies Inc (南茂) yesterday called off plans to sell a quarter of its shares for NT$11.9 billion (US$373.2 million) to China’s Tsinghua Unigroup Ltd (清華紫光) because of regulatory hurdles.
Instead, the company’s board had approved plans to sell a 55 percent share of its Chinese driver IC manufacturing subsidiary ChipMOS Technologies (Shanghai) Ltd (上海宏茂) for 498 million yuan (US$72.3 million) to a consortium of investors led by Tsinghua.
After the transaction, Tsinghua will hold a 48 percent controlling stake in ChipMOS Technologies (Shanghai).
The deal is expected to be completed by the end of the year.
The new deal came as Tsinghua’s original plan to buy a 25 percent share of ChipMOS was stalled along with its bid to purchase shares of Powertech Technology Inc (力成科技), the nation’s biggest memorychip packager, for NT$19.4 billion.
“We have made every effort and communicated with government agencies over the past year to make this deal happen,” ChipMOS chairman S.J. Cheng (鄭世杰) told a media briefing yesterday.
Given the current political climate, the company believes there is little chance of a breakthrough in the near term, Cheng said.
“However, our capacity expansion in China can no longer be delayed,” he said.
ChipMOS was planning to allocate part of the NT$11.9 billion proceeds from the share sale to finance its driver IC capacity expansion in China via ChipMOS Technologies (Shanghai).
“We need to boost capacity to reach economies of scale and cope with surging demand for driver ICs by Chinese flat-panel makers,” Cheng said. “The collaboration with Tsinghua will help us grab more orders, in addition to boosting financial support.”
China’s BOE Technology Group (京東方), TCL and China Electronics Panda Crystal Technology Corp (中電熊貓) are ramping up new production lines from this to the next three years, which should significantly stimulate demand for driver ICs, Cheng said.
ChipMOS expects its Shanghai subsidiary to double its revenue each year over the next three years and ultimately contribute about 30 percent to ChipMOS’ annual revenue, Cheng said.
The company also plans to list the Shanghai firm in China, he said.
ChipMOS will start making plans for an initial public offering after the company begins making a profit, possibly in the second half of next year, he said.
ChipMOS is also in talks with Tsinghua to build a new memorychip packaging factory in China, Cheng said.
The company expects to book 2.29 billion yuan in asset disposal gains from the sale of its ChipMOS (Shanghai) holding to Tsinghua. That would translate into earnings per share of NT$2.67, it said.
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