Positions Amkor for Leadership in High Growth Markets for Flip Chip and Wafer Level Packaging
CHANDLER, Ariz., July 21 -- Amkor Technology, Inc. (Nasdaq: AMKR) today announced that it has signed definitive agreements to acquire privately-held Unitive, Inc., based in North Carolina ("Unitive"), and to obtain a majority interest of approximately 60% in Taiwan-based Unitive Semiconductor Taiwan Corporation ("UST"), a joint venture between Unitive and various Taiwanese investors. Unitive and UST are among the world's leading providers of wafer level technologies and services for flip chip and wafer level packaging applications.
With these acquisitions, Amkor gains industry-leading technology for electroplated wafer bumping and turnkey wafer level "chip scale" packaging, together with installed and operationally qualified, high volume 200mm and 300mm electroplated wafer bumping and wafer level packaging manufacturing operations. Unitive is on the forefront of development in "back-end" wafer level processing technologies including wafer level CSP, electroplated lead-free and low alpha wafer bumping, fine pitch solder bumps, redistribution, and multi-layer thin film capabilities. Unitive is currently working with more than 50 customers on nearly 200 application development projects.
"Flip chip is already a conventional packaging technology for microprocessors and is becoming mainstream for graphics, ASICs and chipsets," said Bruce Freyman, Amkor's president and chief operating officer. "As the market for flip chip gains traction, our customers have been asking for end-to-end solutions for flip chip on 200mm and 300mm wafers that incorporate bump, probe test, assembly and final test. These transactions provide Amkor with leading-edge technology, a strong applications development team and high volume production capacity for 300mm wafers that is operating with proven technology 18 to 24 months ahead of a comparable internal investment timeline. As a result, we expect to be in a much stronger position to increase our share of the PC graphics and chipset market."
"As the microelectronics industry increases adoption of flip chip and wafer level packaging, the ability of subcontract assembly companies to provide integrated wafer bumping, wafer level processing and chip packaging should be a key differentiator in the marketplace," said Jan Vardaman, president of industry research firm TechSearch International, Inc.
According to TechSearch International, flip chip unit growth is expected to triple between 2003 and 2007. This above-semiconductor-industry growth will be driven by strong adoption of flip chip among producers of high performance logic, graphics and chipsets.
TechSearch International also estimates that the number of 200mm-equivalent wafers processed for wafer level packaging will rise more than five-fold between 2004 and 2007. The growth in wafer level packaging reflects growing adoption of cell phones and other hand-held appliances where functionality is increasing while system boards are shrinking. Product designers are seeking system-level "package" solutions that offer lower cost and better performance than traditional low lead count packages.
In separate transactions, Amkor is acquiring Unitive and a 60% interest in UST. The combined cash purchase price is estimated at $48 million with the assumption of approximately $23 million of debt. Amkor will pay $32 million at closing with the $16 million balance to be paid one year later. In addition, Amkor will retain a call option to acquire the remaining 40% of UST at any time over the next 18 months for NT$611 million, or approximately $18 million. The Unitive contract terms provide for a performance based earn-out that is capped at $55 million and is payable one year from closing in cash or stock at Amkor's discretion. The UST transaction also provides for a performance based earn-out that is estimated to be $2 million. The transactions are scheduled to close in August 2004, at which point Unitive and UST will become subsidiaries of Amkor.
"The acquisitions of Unitive's technology and the UST production operation in Taiwan are key elements of Amkor's strategy to offer to our customers a comprehensive turn-key solution of bump, wafer probe, assembly, and final test for advanced packaging needs," said Oleg Khaykin, Amkor's executive vice president for corporate development. "UST's bumping operation in Taiwan is located within the same technology park as Amkor's newest advanced packaging and test facility, acquired in March of this year. We expect this strategic co-location to enable significant efficiencies in our supply chain for advanced packaging applications."
The current Unitive and UST management teams in North Carolina and Taiwan will remain in place. The Unitive organization in North Carolina will continue to focus on development of advanced bumping and wafer level packaging technologies, which will be integrated into Amkor's turnkey assembly and test solutions. Through the Unitive facilities in North Carolina, Amkor will offer wafer bumping, wafer level packaging and other back-end wafer level processing. In Taiwan, UST will provide electroplated wafer bumping and, through integration with Amkor's operations, a complete suite of wafer level processing, assembly and test services.
"We look forward to working closely with our new colleagues at Amkor to leverage our respective strengths and ensure that Amkor plays a leading role in supporting growing customer demand for flip chip and wafer level packaging," said Daniel Teng, president of Unitive Semiconductor Taiwan.
"With the projected industry growth of these wafer level processing technologies across a broad range of applications, we believe the integration of Unitive's development team and manufacturing capability with Amkor's assembly and test infrastructure can drive strong growth in the flip chip and wafer level packaging businesses," said Ken Donahue, president of Unitive, Inc.
Unitive is considered to be the leading independent developer of electroplated wafer bumping technology and earlier this year announced the industry's first electroplated lead-free wafer bumping process. Unitive also operates the industry's most advanced turnkey capability for wafer level chip packaging, providing an integrated suite of services, including design, wafer bumping, multi-layer redistribution, backgrind, dicing, probe, tape & reel, backside laminate & metallization and laser marking. In 2003 Unitive introduced the world's first independent 300mm electroplated wafer bumping production line at its Hsinchu, Taiwan manufacturing facility.
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, manufacturing and support 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, the expected closing of the acquisitions; the increasing adoption by the microelectronics industry of flip chip and wafer level packaging; Amkor's improved ability to compete in the PC graphics and chipset market; the expected supply-chain efficiencies generated by the acquisitions; the status of the management teams and operational activities in North Carolina and Taiwan; Amkor's role in the flip chip and wafer level packaging market; the ability of subcontract assembly companies to provide integrated wafer bumping, wafer level processing and chip packaging as a key differentiator in the marketplace; and projected growth in the flip chip assembly and wafer level packaging market and the drivers behinds such growth. 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: the ability to attract and retain Unitive and UST employees; risks associated with the acquisition, including satisfaction of closing conditions; difficulties with centralizing and integrating Taiwan and North Carolina operations; the highly unpredictable nature of the semiconductor industry; volatility of consumer demand for products incorporating our semiconductor packages; deterioration of the U.S. or other economies; competitive pricing and declines in average selling prices of our products; 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, 2003 and Form 10-Q for the quarter ended March 31, 2004.
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