Mar. 25, 2008 – Chip test firm King Yuan Electronics Co. (KYEC) is spinning off its memory testing business as an individual company in order to narrow the parent company’s focus on logic chip testing operations, according to local reports.

KYEC will own 100% of the new company, to be spun off in Jan. 2009 with ~$66M capitalization, and will hand off about $118M in assets and $18M of debt. The business represented about 30% of KYEC’s 2007 sales of ~$452M, notes the Taiwan Economic News, adding that KYEC operates >1600 test machines inspecting logic chips for customers including Qualcomm, Nvidia, NXP, and MediaTek, and memory chips for SST, Spansion, and Elite Semiconductor.

Digitimes, citing Chinese media reports, speculates that the new biz, tentatively named “King Po,” will initially focus on memory IC testing and eventually migrate to turn-key solutions. It also will seek long-term partners, such as KYEC’s memory card subsidiary Kun Yuan (which has obtained investment backing from A-Data and a UMC-backed VC company). The Taiwan Economic News reports another likely partnership candidate is Aptos Technology, a memory chip packager also partly held by KYEC.

Both publications cited company executives indicating that such a spinoff was in the works for two years. With the split, the memory business should have a higher growth ceiling — it currently focuses on niche memory chips and NOR flash, but long-term growth will lie in expanding to standard memory and NAND, notes the Taiwan Economic News.

After the divestiture, KYEC will focus on testing SoCs, RF ICs, LCD drivers, CMOS image sensors, and ICs for consumer electronics, Digitmes reports.