[Reporter Hong Youfang/Report from Hsinchu]KYEC (2449), a major semiconductor testing company, held a press conference today and announced that the board of directors has resolved to dispose of all 92.1619% of the shares indirectly held by Suzhou Jinglong in China. The board of directors also decided to withdraw from the Chinese semiconductor manufacturing business. In response to the strong demand for AI and HPC, it decided to increase its investment in high-end testing R&D and production expansion in Taiwan. This year’s capital expenditure increased from NT$7 billion to NT$12.281 billion, an increase of more than 75%.
KYEC stated that due to the impact of geopolitics on the global semiconductor industry supply chain, the impact of the United States’ restrictions on China’s semiconductor industry technology, the trade entity list, and the ban on certain products, the ecological environment of semiconductor manufacturing in China has changed, and the market has Competition is getting tougher. KYEC has fully considered the environment of Suzhou Jinglong Technology, which it invested in, and measured KYEC’s future operational development and growth strategic planning and the long-term more effective use of financial resources. The board of directors has made a decision to withdraw from China’s semiconductor manufacturing business at this time.
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KYEC pointed out that due to the rapid development of science and technology, the complexity of specifications of terminal mobile devices, automobiles, Internet of Things, high-efficiency computing (HPC) and artificial intelligence (AI) software and hardware products has jumped. The quality of products of global major customers has changed and their needs have changed over time. In terms of its operational development strategy, KYEC will focus its resources on Taiwan’s semiconductor manufacturing supply chain, work closely with customers and suppliers, and strengthen testing services for fabless advanced process products and integrated device manufacturing (IDM) ) to increase outsourcing orders and create higher growth space for revenue and profits.
KYEC emphasized that after deducting relevant taxes and other effects from the sale of Jinglong’s long-term investment transaction, the net cash inflow will be approximately NT$16.6 billion. After the funds are repatriated to Taiwan, the funds will be used in addition to accelerating the construction of factory equipment and enriching working capital. , will invest in higher-end testing technology research and development and expand high-end testing equipment to respond to strong market demand for AI, HPC and other markets. KYEC’s board of directors has decided today to increase capital expenditures this year from NT$7 billion to NT$12.281 billion. billion.
In addition, KYEC will also allocate approximately 3.668 billion yuan of funds obtained from the disposal of assets, and will add cash dividends of 1.5 yuan/share next year and the year after next to reward shareholders. In addition, it will not rule out cooperation with domestic and foreign listed companies. Strategic cooperation with downstream and industry peers to seek better global development opportunities for Taiwan’s semiconductor industry.
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Jinglong has contributed a lot to KYEC’s revenue and profits, estimated to be as high as 20 to 30%. Will selling it have an impact on KYEC’s operations? Can Taiwan’s short-term performance make up for it? Zhang Gaoxun, general manager of KYEC, pointed out that the sale is expected to be recognized in the third quarter. This year it will only affect the fourth quarter, but it will have almost no impact on the whole year. Next year, there will be proceeds from the sale and Taiwan’s investment in production expansion. limited. At the same time, the company continues to increase investment in Zhunan and Tongluo factories. It is estimated that the existing factories will soon be close to full capacity, and plans to start construction of the fourth factory in Tongluo. The company will also conduct an investment assessment of Taiwan plus one, but there is currently no specific plan. This year Capital expenditures are also not spent on Taiwan Plus One.
U.S.-China tech war: Taiwan packaging and testing factory withdraws from China
Affected by the U.S.-China technology war and China’s policy toward independent supply, Taiwanese packaging and testing factories investing in and building factories in China are feeling the pressure of relocating production capacity. Many companies have sold local factories and returned to Taiwan to invest in higher-end products. technology research and development or construction of production capacity. In addition to KYEC, there are also many packaging and testing factories.
In December 2021, ASE Investment Holdings sold a total of four factories in Weihai, Suzhou, Shanghai and Kunshan to Beijing Zhilu Capital. The total transaction amount was US$1.46 billion, and the disposal benefits were recognized as approximately US$630 million (approximately NT$17.5 billion). ).
In November 2016, Nanmao Technology sold 54.98% of its reinvested equity in Shanghai Hongmao Microelectronics to China Unisoc Group. The transaction amount was approximately RMB 498.43 million, and the disposal proceeds were RMB 2.288 billion. In December 2023, the remaining 45.02% equity will be sold to 11 Chinese companies for a sale amount of 979.3 million yuan (approximately NT$4.29 billion), due to the increased cost of previous disposals. Disposal losses were 41.8 million yuan.
In June 2023, Licheng Technology sold 70% of its shares in the Suzhou factory to Shenzhen Longsys Electronics. The transaction amount reached US$131.6 million (approximately NT$4.087 billion), and the total disposal benefits were US$79.47 million (approximately NT$2.468 billion). . Lingsheng Precision sold its China Ningbo Liyuan to Zhejiang Yin’anhui Enterprise Management Company in February 2024, with a transaction amount of approximately RMB 71 million (approximately NT$307.8 million).
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