SMIC plots chip-packaging foray with pair of deals worth 3.3 billion yuan
Semiconductor Manufacturing International Corp (SMIC), China’s largest contract chipmaker, is poised to extend its operations into packaging integrated circuits after concluding a pair of deals last week worth a combined 3.3 billion yuan (HK$3.9 billion) that raised its stake in Jiangsu Changjiang Electronics Technology (JCET), analysts said.
Listed in Hong Kong and New York, SMIC’s enlarged stake of 14.26 per cent has made it the biggest shareholder in JCET, which runs mainland China’s largest semiconductor packaging assembly and test business.
“With JCET’s need for funding, SMIC took the opportunity to acquire a [greater] stake with a view on the long-term trend for [semiconductor] foundries penetrating into packaging,” Jefferies analyst Ken Hui said in a report.
We consider paying five times book [value for the JCET deal] as expensive
Hui said Taiwan Semiconductor Manufacturing Company (TSMC), the world’s biggest independent contract chip manufacturer, was already pursuing that expansion strategy.
TSMC has been investing since last year in a new packaging technology called Integrated Fan-Out or InFO.
It is an advanced packaging that is widely speculated to be the one used by TSMC from this quarter on Apple’s A10 chip, which will likely power the anticipated iPhone 7 and 7S models to be released later this year.
“This marks the first entry of a foundry into integrated circuit (IC) packaging,” Sanford Bernstein senior analyst Mark Li said in a report.
Jefferies’ Hui, however, has reservations about Shanghai-based SMIC’s decision to increase spending in the chip-packaging sector.
