Sale of ASE in China to Upgrade Portfolio: Analysts

  • Chen Cheng Hui / Staff Reporter

Analysts said the sale of some Chinese subsidiaries proposed by ASE Technology Holding Co last week is expected to impact overall earnings in the short term, but in the long term the product portfolio. He said it would be useful for optimization.

ASE is the world’s largest chip packaging and testing company. Its products include wire bonding, flip chips, system-in-package (SiP) solutions, and a wide range of electronics manufacturing services.

The company announced on Wednesday that it plans to sell its shares in Global Advanced Packaging Test (Hong Kong) Ltd, ASE (Weihai) Inc, Suzhou ASEN Semiconductors Co Ltd, and ASE Advanced. Did. Semiconductor (Shanghai) Ltd (Shanghai Nikkei Handou), ASE (Kunshan) Inc (Kunshan Nigetsu Handou), Beijing Wise Road Asset Management Co Ltd (Beijing Wise Road Asset Management Co Ltd).

Photo: Grace Hung, Taipei Times

The Kaohsiung-based company said the total amount of shares to be sold is US $ 1.46 billion and the gain on sale is expected to be approximately US $ 630 million.

Subsidiaries in Kunshan, Suzhou and Shanghai mainly manufacture wire bonding, providing packaging and test services, and the Weihai plant focuses on manufacturing discrete parts, a former large investment advisor said. Said in a research note on Friday.

“The sale of these facilities costs about 7-8% of the company’s packaging and testing revenue and is initially expected to impact about 4-5% of overall revenue,” Yuanta said. Analysts say.

After the sale proposal, ASE’s business in China will be Siliconware Technology (Suzhou) Ltd, ASE Shanghai Material, and ASE Wuxi, with the remaining Suzhou subsidiary accounting for about 8%. Occupy. According to analysts, the company’s packaging and testing revenue.

They said ASE Technology plans to invest in Taiwan and a subsidiary in Suzhou, which provides high-end packaging and applications, and said the move “leads to capacity and technology development.” rice field.

“ASE will continue to enhance high-end packaging and testing technology and capacity to help optimize our entire product portfolio,” they said.

According to analysts, the company aims to develop advanced chip packaging and test services that cover power management, radio frequency, automobiles, mobile phones and SiP chips.

According to Yuanta, ASE technology is expected to be in stronger demand than expected in the traditional low season of the first quarter of next year as product specification upgrades increase packaging requirements and testing procedures.

According to analysts, the company’s business will also be boosted by a wide range of electronics manufacturing service customers who postponed orders this quarter due to a shortage of parts.

“Packaging and testing capacity is still in short supply in 2022, and increased silicon content in electronic devices will benefit semiconductor demand, ASE availability and product mix,” Yuanta said. Analysts say.

The company’s stock closed at NT $ 109 in Taipei on Friday, up 3.81 percent from the previous session.

This year’s stock price is up 34.07% compared to a 20.12% rise in the broader market.

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