ASE Technology Holding Co’s (日月光投控) proposed sale of some Chinese subsidiaries is expected to affect its overall revenue in the near term, but would help optimize its product portfolio in the long term, analysts said last week.
ASE is the world’s largest chip packaging and testing company. Its products include wire bonding, flip chip, system-in-package (SiP) solutions and broad-based electronics manufacturing services.
The company on Wednesday announced that it is planning to sell its shares in Global Advanced Packaging Test (Hong Kong) Ltd, ASE (Weihai) Inc (日月光半導體威海), Suzhou ASEN Semiconductors Co Ltd (蘇州日月新半導體), ASE Advanced Semiconductor (Shanghai) Ltd (上海日榮半導體), ASE (Kunshan) Inc (昆山日月光半導體) and Beijing Wise Road Asset Management Co Ltd (北京智路資產管理).
Photo: Grace Hung, Taipei Times
The Kaohsiung-based firm said the stock to be sold totals US$1.46 billion and it expects to book about US$630 million in divestment gains from the divestment.
The Kunshan, Suzhou and Shanghai subsidiaries mainly produce wire bonding, and offer packaging and testing services, while the Weihai plant focuses on discrete component manufacturing, Yuanta Securities Investment Consulting Co (元大投顧) analysts said in a research note on Friday.
“The sale of those facilities will cost about 7 to 8 percent of the company’s packaging and testing revenue, and it is expected to have an impact of about 4 to 5 percent on its overall revenue initially,” Yuanta analysts said.
After the proposed divestment, ASE’s operations in China would be Siliconware Technology (Suzhou) Ltd (矽品蘇州), ASE Shanghai Material (日月光上海材料) and ASE Wuxi (日月光無錫), with the remaining Suzhou subsidiary accounting for about 8 percent of the firm’s packaging and testing revenue, the analysts said.
ASE Technology is planning to invest in its operations in Taiwan and the Suzhou subsidiary, which offers high-end packaging and applications, they said, calling the move “conducive to the development of production capacity and technology.”
“ASE will continue to strengthen high-end packaging and testing technology and production capacity, which will help optimize its overall product portfolio,” they said.
The company is seeking to develop advanced chip packaging and testing services covering power management, radio frequency, automotive, mobile phone and SiP chips, the analysts added.
Yuanta said that ASE Technology is likely to see stronger-than-expected demand in the first quarter of next year, the traditional low season, as product specification upgrades would increase packaging requirements and testing procedures.
The firm’s business would also be boosted by clients of its broad-based electronics manufacturing services that have postponed orders this quarter due to component shortages, the analysts said.
“Packaging and testing capacity will still be in short supply in 2022, and the increase in silicon content in electronic devices will benefit the demand for semiconductors, which will benefit ASE’s capacity utilization rate and product mix,” Yuanta analysts said.
The company’s shares closed at NT$109 in Taipei on Friday, up 3.81 percent from the previous session.
Its stock price has increased 34.07 percent so far this year, compared with the broader market’s 20.12 percent rise.
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