July 14, 2006 – Advanced Semiconductor Engineering Inc. (ASE) and Powerchip Semiconductor Corp. have agreed to form a joint venture in Taiwan to provide memory IC-related package and testing services. ASE will provide 60% of the initial $50 million funding for the new company, Power ASE Technology Inc., which will operate in 6000 sq. m. of leased production space in ASE’s Chungli campus. Volume production is scheduled for 4Q06. Jason Chang, chairman of ASE Group, will serve as chairman of the new JV. Other management team members will be appointed shortly, the companies said.

The new JV is a “win-win” for both companies, offering backend capacity to support Powerchip’s growth, while ASE will benefit from expertise in memory testing obtained from the venture to support memory test demand with its SIP and SOC offerings to customers, noted Jason Chang, chairman of ASE Group.

While historically focused on high-end core logic and ASIC packages, ASE now sees opportunities in the memory semiconductor sector, which has become more consolidated, with better fundamentals and more balance between supply and demand, and lower cyclicality risk, according to Chang. With an expected upcoming PC product cycle, “DRAM companies will align with backend subcontractors to support their ramp-up, instead of using subcontractors as an overflow support,” while flash memory market will grow thanks to consumer device demand, he stated.

Powerchip, meanwhile, gains another source for packaging and testing, to help support its three 300mm DRAM/flash fabs that will all be running at peak capacity within the next 12 months, according to company chairman Frank Huang.