SANTA CLARA, Calif. -- Officials with Taiwanese IC-packaging and test giant Advanced Semiconductor Engineering Inc. (ASE) here outlined a bold strategy to enter the China market, telling SBN that the company plans to open two plants at two separate locations. The first facility is expected to be in production by early 2002.
The move--part of ASE's ongoing expansion--represents the latest entry into China's booming chip-packaging market. In fact, China's entire chip industry is growing at a time when other regions around the world are struggling with the severe 2001 semiconductor downturn.
For this reason and others, Amkor, Asat, IBM Microelectronics, Gem Services, and other IC-packaging houses are scrambling to set up shop in China. And now, ASE--the world's second largest chip subcontractor, next to U.S.-based Amkor Technology Inc.--has its sights set on a major entry into China.
The company plans to build separate and advanced IC-assembly and packaging plants in the cities of Hang Zhou and Shanghai, said Tien Wu, president of ASE's U.S. and European operations, which is based in Santa Clara.
Headquartered in the southern Taiwan city of Kaohsiung, ASE also has IC-packaging and/or test plants in Taiwan, South Korea, Malaysia, the Philippines, and the United States.
The company's initial backend chip-packaging/assembly plant in China will be in Hang Zhou, which is located just outside of Shanghai. ASE's new 300,000-square-foot plant in that location will move into production by the first quarter of 2002 or so, according to Wu in interview on Tuesday.
ASE will offer ball-grid array (BGA) packages and other advanced products for customers at the new plant, he said. "It depends on customers' requirements," Wu said. Before joining ASE last year, Wu held various engineering and management positions at IBM Microelectronics for about 12 years.
The ASE executive added that the company's new plant in China will focus on advanced technology--not low-end chip-packaging. "We are not simply building a low-end assembly plant in China," he added in the interview with SBN.
In fact, ASE intends to turn the new operation into a sprawling "city." Recently, the company purchased some 3,000 acres of land in that location. ASE will not only build an IC-packaging plant there, but it will also construct houses and apartment buildings to accommodate the workers at the facility.
While the company is in the process of ramping up this plant, it also hopes to open up another facility in nearby Shanghai at an undisclosed time. The company's proposed Shanghai-based facility will be a smaller-scale, chip-packaging operation designed for IC-prototyping purposes, Wu explained.
Sources in the industry have reported that ASE's total investment in China could reach over $1 billion. ASE officials would not comment on those estimates during the interview.
ASE has been looking at the China market for months (see April 28 story ). And surprisingly, ASE claims to have received a blessing from both the Taiwanese and Chinese governments to set up shop in China.
The Taiwanese government forbids local companies from making an investment of a certain dollar value in China. And the government is also worried that Taiwan's prized chip makers will move their assets offshore, especially to its political rival in China.
But prompted by its key customers--reportedly including IBM, Intel, Motorola, and others--ASE can no longer afford to stand on the sidelines in China. Other IC-packaging houses are also entering into the China market as well (see Jan 19 story).
What's driving the mad rush into China is obvious: the nation remains one of the world's fastest growing markets for chips, cellular phones, PCs, consumer electronics, and other products.
The Chinese government also has an unwritten mandate that foreign-based system manufacturers must procure 80% of their components from local sources. These sources include domestic component suppliers as well as foreign entities with factories inside China.
As a result, system manufacturers and chip makers are asking--if not forcing--the IC-packaging houses to set up shop in China. According to ASE's Wu, chips that are packaged within China count as local content.