Taiwan Chip Packager ASE to Buy Stake in Rival for $1.1 Billion

Taiwan’s Advanced Semiconductor Engineering Inc., the world’s biggest chip assembler and tester, plans to buy a stake of as much as 25 percent in Siliconware Precision Industries Co. for about NT$35.1 billion ($1.1 billion).

ASE, as the Kaohsiung, Taiwan-based company is known, seeks to acquire 779 million shares of its Taiwanese competitor, known as SPIL, for NT$45 a share on the open market, ASE said at a press conference on Friday. The price represents a 34 percent premium to SPIL’s last close.

Profits of Taiwan technology companies are coming under pressure amid increased global competition and weaker economic growth. Taiwan Semiconductor Manufacturing Co. said in July it may post its first revenue decline in almost four years.

The move is “overall positive for the sector,” Gokul Hariharan, an analyst at JPMorgan Chase & Co., wrote in a note after the deal was announced. “Consolidation is something that we have been pushing as a key theme” in the outsourced semiconductor assembly and test industry, Hariharan said.

ASE’s plan is part of more than $46 billion of semiconductor deals of more than $100 million with an Asia target or buyer announced in the past year, according to data compiled by Bloomberg. More than 60 percent of those deals, by value, offered a premium of 10 percent to 25 percent, the data show.

While ASE Chief Financial Officer Joseph Tung told reporters the move is aimed at building cooperation with SPIL, Byron Chiang, a spokesman for SPIL, said the company learned about ASE’s plans through the public announcement.

“We’re discussing it with our lawyers and we’ll hold a board meeting within seven days,” Chiang said. “Investors’ rights won’t be harmed.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE