Taiwan IC packaging and testing specialists ASE and Siliconware Precision Industries (SPIL) will convene provisional shareholders meetings in February 2018 and set up a joint holding company next May at the earliest, as they have won all the necessary regulatory approvals after China issued a green light to their proposed merger on November 24, according to a joint statement from ASE and SPIL.

The approval from Anti-Monopoly Bureau of the Ministry of Commerce came after Taiwan's Fair Trade Commission and the US Federal Trade Commission issued their approval on the merger case on November 16, 2016, and May 15, 2017. Both firms announced their merger plan in May 2016.

As both firms have received all necessary antitrust clearances for the deal, they will actively proceed with the establishment of a holding company, which will be named ASE Industrial Holding, but ASE and SPIL will retain their names, management teams and employees after the new entity is founded, the statement said.

Conditional approval

Industry sources said that the China ministry has imposed four conditions with its approval of the merger to ensure market competition. Among the conditions is that the holding company should maintain ASE's and SPIL's separate legal entities for both companies and continue to act as independent competitors during the restriction period of 24 months. In addition, the ministry said that during the period, the holding company should exercise limited shareholder rights, including the rights to receive bonuses from both companies and financial data, but the holding company will not be allowed to exercise other rights.

China has also asked both ASE and SPIL to provide services to the customers on a non-discriminatory basis, while both sides have also been asked to not limit the customers' choice of alternative suppliers.

The sources said though ASE and SPIL are combining to strengthen their force to better counter China's supply chains and tap China IC packaging and testing market, they will face great challenges from China competitors, such as Jiangsu Changjiang Electronics Technology, Tongfu Microelectronics and Tianshui Huatian Technology. The three China IC packagers and testers are enjoying high annual revenue growths of 20-30%.

The sources continued that either SPIL or ASE is likely to unload or adjust their plants in China after the holding company is established. In fact, SPIL has announced that it will sell 30% stakes of its Suzhou subsidiary to Tsinghua Unigroup, and the China group will have one seat on the subsidiary's board of directors. The move is seen to help SPIL win IC packaging and testing orders from semiconductor firms under Tsinghua Unigroup, including IC designers Spreadtrum Communications and DRA Microelectronics, as well memory makers Yangtze Memomry Technology and New H3C.

By: DocMemory
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