Report: Intel poised for stake in Taiwan’s most profitable chip assembler

February 1, 2007 – Intel Corp. is reportedly taking part in a $106 million private equity investment in Taiwan chip assembly firm Powertech Technology Inc., to be issued sometime in 1H07, according to the Taiwan Economic News.

Powertech was the most profitable chip assembler in Taiwan last year with about US $0.31 in EPS on total revenues of $514 million, and plans for about $303 million in capex this year. The paper noted investors are projecting even better performance in 2007, with earnings rising 37% to $0.42 EPS and nearly 50% higher revenues (to $757 million).

Intel had been speculating acquiring a stake in Powertech, having earlier indicated it planned to expand partnerships in Taiwan targeting IC design and chip assembly. The chipmaker recently invested in fabless house Skymedi, which specializes in control ICs for flash memory control cards. Memory module supplier Kingston Technology, which helped Intel make that deal, is currently Powertech’s largest institutional shareholder, the paper noted.

In 2000, Powerchip Semiconductor sold its backend equipment and about 500 Japan-trained assembly workers to Powertech, pushing the firm into memory chip assembly, the paper noted. Between 2000 and 2004, Powertech added NAND flash packaging and testing capabilities, with Toshiba a main customer.

Powertech chairman TK Tsai did not identify specific buyers, but stressed the issuance aims to attract two or three “world class” partners, and not only for the capital, according to the paper.


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