SAN JOSE, Calif. Amid ongoing losses, Asat Holdings Ltd. on Tuesday (Feb.28) said that the transfer of all manufacturing operations to its new facility in Dongguan, China is anticipated to be completed by the end of April or about four months ahead of schedule.
Asat’s new 560,000-square-foot facility is one of the largest chip-packaging and test facilities in China. Located in Dongguan, about 90 minutes from Hong Kong, the facility offers lower costs to customers, according to Asat (Hong Kong).
“The completion of the move to China is a major milestone for Asat and we are pleased that this process is ahead of schedule,” said Robert J, Gange, president and CEO, in a statement.
“Beginning in the July quarter, we will essentially be operating one manufacturing facility that will have a much leaner cost structure,” he said. “Labor costs for operators in Dongguan are approximately one-fifth of the rate in Hong Kong. In addition, we expect to achieve significant overhead and SG&A savings as we move some non-direct labor personnel, including engineering, finance and maintenance support, to China.”
Asat also said revenue in the third quarter of fiscal 2006 was $48.2 million, an increase of 13 percent compared with net revenue of $42.6 million in the second quarter of fiscal 2006.
Net loss in the third quarter of fiscal 2006 was $5.9 million. Third quarter net loss compares with a net loss of $9.7 million.
For the fourth quarter of fiscal 2006, ending April 30, 2006, the company expects revenue to be approximately flat with the third quarter. “We believe there will be some temporary disruption in our business as we enter the final stages of our move to China during the fourth quarter,” said Gange.
“The biggest challenge will be executing the move of most of the remaining equipment from Hong Kong to China,” he said. “During this portion of the transition period some of our equipment will be offline, which will have an impact on the amount of equipment available for revenue generation. We expect the majority of the equipment will be moved out of Hong Kong at the end of April and look forward to having the majority of our manufacturing capacity online by the end of the July quarter.”