STATS ChipPAC handing low-end packaging ops to China firm

June 26, 2006 – In a move to slough off low-end business and focus on leading-edge technologies, STATS ChipPAC Ltd., a provider of semiconductor test and packaging services, and China Resources Logic Ltd. have agreed to set up a JV for assembly and test services in Wuxi, China. Under the deal, CR Logic’s local subsidiary, Wuxi CR Micro-Assembly Technology Ltd., will purchase $35 million worth of equipment from STATS ChipPAC over four years. STATS ChipPAC also will receive a commission on the aggregate amount of revenues generated from such orders on a quarterly basis in 2007, 2008 and 2009, as well as a 25% ownership stake in the CR Logic subsidiary for $10 million.

Essentially, the company is farming out work for several of its lower-end leadframe package families to the mainland firm, to focus on more leading-edge products such as system-in-package, flip-chip, and 3D technologies, as well as higher pin-count mature technologies including PBGA, QFP, and stacked die TSOP packages. “The joint venture will provide the best overall solution for our customers and allow our factories to focus on what we do best — expanding our full turnkey solutions for leading edge products,” stated Tan Lay Koon, president and CEO.

Under the deal, STATS ChipPAC will transition customers of its low lead count products, including small outline integrated circuit (SOIC), plastic leaded chip carrier (PLCC), plastic dual in-line package (PDIP), mini small-outline package (MSOP), small shrink outline package (SSOP), and thin-shrink small outline package (TSSOP). STATS ChipPAC will continue provide sales and technical support to customers on specific low lead count packages until the end of 2009.

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