ChipMOS Technologies and Tsinghua Unigroup have announced an agreement to form a joint venture and to mutually terminate Tsinghua Unigroup's earlier private placement plan.

ChipMOS indicated subsidiary ChipMOS BVI will transfer 54.98% of ChipMOS Technologies (Shanghai) to a group led by Tsinghua Unigroup with the transaction totaling approximately CNY498.4 million (US$77 million). After the deal closes, ChipMOS BVI will own 45.02% of ChipMOS Shanghai, while Tsinghua Unigroup, through its subsidiary Tibet Unigroup Guowei Investment, will own 48%. The remaining 6.98% will be held by other strategic investors, including a limited partnership owned by ChipMOS Shanghai's employees.

Proceeds from the sale of ChipMOS Shanghai shares will be used to expand production capacity at ChipMOS Shanghai, and to further enhance services offered by the firm, which will be a JV between ChipMOS Taiwan and Tsinghua Unigroup.

ChipMOS BVI, which originally owned 100% of ChipMOS Shanghai, will also increase capital in ChipMOS Shanghai with the funds obtained from the sale of ChipMOS Shanghai shares. ChipMOS Shanghai is expected to gain a cash injection of approximately CNY1.074 billion after the deal closes.

The sale of 54.98% of ChipMOS Shanghai is expected to result in a gain for ChipMOS of approximately NT$2.288 billion (US$71.8 million), due primarily to a gain from the appreciation of fixed assets and land use rights.

Meanwhile, a mutual agreement was reached between ChipMOS and Tsinghua Unigroup to terminate Tsinghua Unigroup's participation in a planned private placement of ChipMOS.

"As a leader of the semiconductor assembly and test segment, ChipMOS will be able to leverage our extensive expertise and relationships, R&D resources and technology roadmap to meet a critical need within the Tsinghua Unigroup portfolio as it works to meet the expanding domestic China market," said ChipMOS chairman SJ Cheng. "The joint-venture will allow us accelerate the planned expansion of ChipMOS Shanghai, while adding new lines, given the higher demand we are seeing for our LCD driver ICs, touch drivers, AMOLED, OLED and memory testing, assembly and bumping services."

"We have been steadily ramping production at ChipMOS Shanghai as part of a three-year capacity expansion plan, which is aligned with the increasing customer demand levels for semiconductor testing and assembly services in Mainland China and our goal of achieving sustainable profitability at ChipMOS Shanghai," Cheng continued. "Other than the US$42 million capital contribution invested and US$33 million bank loan facility secured previously, the additional CNY1.074 billion capital contribution will help us achieve our targeted economies of scale and long-term goals."

By: DocMemory
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