Expanding Manufacturing Footprint to Accommodate 2004 Growth in Taiwan
CHANDLER, Ariz., Feb. 12 -- In order to accommodate strong business growth in Taiwan, Amkor Technology, Inc., (Nasdaq: AMKR - News) today announced it has entered into an asset purchase agreement to acquire a 354,000 square foot assembly and test facility in Taiwan's Hsinchu Industrial Park from FICTA Technology, Inc. Amkor is currently using a small portion of the building for its test operations and will immediately occupy assembly space that has already been equipped by FICTA. The balance of the building will be equipped for operational use during 2004 and 2005. The acquisition more than doubles Amkor's potential manufacturing footprint in Taiwan.
Under the agreement, Amkor will acquire land, building, equipment and other assets for $42 million, of which $24 million will be paid at closing. The remaining $18 million will be paid one year from closing. In addition, Amkor expects to hire approximately 100 FICTA employees. The transaction is expected to close sometime in the first quarter of 2004, and is subject to regulatory approvals.
The acquisition provides Amkor with a second major factory in Taiwan, aimed at supporting Amkor's accelerating growth in the region. The three-year old facility provides immediate production capacity for several advanced IC packages, including ChipArrayBGA®, PBGA and Stacked die packages. In addition, Amkor plans to transfer its Flip Chip production lines to the new factory and will be centralizing its Taiwan test operations in the new facility.
"This acquisition underscores our commitment to support growing demand from Taiwan-based customers and our U.S. and European-based customers who wish to perform wafer foundry, assembly and test in Taiwan," said James Kim, Amkor's chairman and chief executive officer. "Since commencing operations in Taiwan in 2001, we have enjoyed strong business growth, with revenues increasing by 40% to 50% each year. In September, 2003 we announced that Amkor was leasing space in this factory to consolidate our test operations in Taiwan, with an option to lease additional space for assembly operations. Over the past several months our business in Taiwan has continued to strengthen, and we now expect our Taiwan revenues, which rose 50% in 2003, to grow by another 50% in 2004. We need additional space to accommodate this increased business and have determined that acquiring the entire FICTA building represents a more desirable strategic solution to our long-term space requirements in Taiwan."
"Approximately $40 million of this asset purchase is provided for in Amkor's previously announced $200 million first quarter 2004 capital expenditure budget," said Ken Joyce, Amkor's chief financial officer.
"One key advantage of the new facility is its proximity to Hsinchu Science Park, which keeps us close to our local Taiwanese customers with access to a high-quality workforce pool," stated Scott Jewler, president of Amkor Taiwan. "We anticipate significant improvement in cycle times with wafers from foundries located in the Science Park."
Amkor Technology, Inc. (Nasdaq: AMKR - News) is a leading provider of contract semiconductor assembly and test services. The company offers semiconductor companies and electronics OEMs a complete set of microelectronic design and manufacturing services. More information on Amkor is available from the company's SEC filings and on Amkor's web site: www.amkor.com .
This press release contains forward-looking statements within the meaning of federal securities laws, including, without limitation, statements regarding equipping the FICTA facility, plans to hire FICTA employees, the expected closing of the acquisition, plans to transfer production lines to and centralize test operations in the FICTA facility, expected Taiwan revenues, planned expenditures, and anticipated cycle times. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results and events to differ materially from historical and expected results, including, but not limited to, the following: incurrence of significant additional costs and expense necessary to equip the FICTA facility; the ability to attract and retain FICTA employees; risks associated with the acquisition, including the need for regulatory approvals, satisfaction of closing conditions and transaction costs; difficulties with centralizing and integrating Taiwan operations; the highly unpredictable nature of the semiconductor industry; volatility of consumer demand for products incorporating our semiconductor packages manufactured in Taiwan; deterioration of the U.S. or other economies; competitive pricing and declines in average selling prices of our products manufactured in Taiwan; and technological challenges. Further information on risk factors that could affect the outcome of the events set forth in these statements and that could affect our operating results and financial condition is detailed in the Amkor's filings with the Securities and Exchange Commission, including the Report on Form 10-K for the year ended December 31, 2002 and the Report on Form 10-Q for the quarter ended September 30, 2003.
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