Taipei, April 1, 2008 (CENS)--After passing a proposal to increase capitalization of its Shanghai affiliate ASE (Shanghai) Co., Ltd. by US$30 million around 10 days ago, the board of director of chip assembler Advanced Semiconductor Engineering Inc., or ASE, yesterday approved the plan to further add US$90 million to the Shanghai operation.

The decisions reflected ASE`s expectations that the government will adopt a loose policy toward Taiwanese investments in mainland China after Kuomintang-nominated Ma Ying-jeou was elected President of Republic of China on March 22, beating the pro-independence ruling Democratic Progressive Party (DPP).

DPP government has made Taiwanese investments in China`s hi-tech industries a taboo by touting such investments will harm the island`s national security.

Taiwanese industry watchers expect ASE`s investment increases in the mainland will incur a new wave of mainland-bound investments by Taiwanese hi-tech manufacturers.

ASE`s major rivals at home, including Siliconware Precision Industries Co., Ltd., Kyec Yuan Electronics Co., Ltd. and Siguard Microelectronics Corp., have similar investment projects. However, their plans have been stuck in the Investment Commission of the Ministry of Economic Affairs for a while. Industry watchers expect their investment plans will be approved as soon as Ma is sworn in on May 20.

ASE executives pointed out the expanding mainland operation is the company`s established policy and their company will raise the capital in third-party location outside Taiwan.

Industry watchers pointed out that ASE expands its Shanghai branch to cope with huge contracts from integrated device manufacturers (IDMs) and fabless house MediaTek Inc. The Shanghai branch will have capitalization of over US$200 million once the two expansion plans are completed.

ASE`s 2007 return from mainland investments was US$25 million, half of which was contributed by the Shanghai branch.

The Shanghai branch`s major customers include Taiwan Semiconductor Manufacturing Co. (TSMC), Semiconductor Manufacturing International Co. (SMIC), Shanghai Hua Hong NEC Electronics, Broadcom Corp., Texas Instruments (TI) and Intel Corp. The branch had revenue of US$200 million or so last year alone and has planned to double the revenue this year.


(by Ken Liu)