Business Context and Reporting Period
This Form 6-K, dated May 8, 2015, reports a material event for Advanced Semiconductor Engineering, Inc. (ASE), the world's largest provider of independent semiconductor manufacturing services. The filing announces the establishment of a joint venture with TDK Corporation to manufacture IC embedded substrates in Taiwan.
Key Financial Metrics and Transaction Details
The filing details the capital structure of the proposed joint venture, "ASE Embedded Electronics Inc.":
- Total Initial Paid-in Capital: Equivalent to US$39,490,000.
- ASE Contribution: US$20,140,000 for a 51% shareholding.
- TDK Contribution: US$19,350,000 for a 49% shareholding.
- Technology License Fee: The JV Company will pay US$19,350,000 as a down payment for TDK's SESUB technology license upon commencement of construction.
- Historical Revenue: The filing notes ASE Group generated US$8.5 billion in sales revenue in 2014.
The filing text does not provide current period revenue, profit, cash flow, margins, debt, or liquidity metrics for ASE beyond the 2014 historical sales figure.
Material Changes and Strategic Outlook
The primary material change is the strategic partnership with TDK Corporation to leverage TDK's SESUB technology for embedded substrate manufacturing. The facility is planned for the Nantze Export Processing Zone in Kaohsiung City, Taiwan. This move aims to expand ASE's portfolio in system-in-package and advanced packaging solutions.
Risks, Contingencies, and Management Commentary
Regulatory Contingencies: The establishment of the joint venture and capital injection are subject to regulatory approvals, including those from the Taiwan Fair Trade Commission and the Export Processing Zone Administration.
Forward-Looking Risks: Management highlights several risks that could cause actual results to differ from expectations, including:
- Cyclicality and market conditions in the semiconductor industry.
- Regulatory changes and environmental liabilities.
- Competitive pressures and the ability to introduce new technologies.
- Geopolitical tensions between the Republic of China and the People's Republic of China.
- Foreign currency exchange rate fluctuations.
Key Facts for Investor Verification
- Confirmation of regulatory approvals from the Taiwan Fair Trade Commission and Export Processing Zone Administration.
- Timeline for the commencement of construction and the subsequent payment of the US$19.35 million technology license fee.
- Impact of the joint venture on ASE's future capital expenditure plans and cash flow.
- Market demand projections for IC embedded substrates utilizing SESUB technology.