Taiwan-based LCD driver IC packaging and testing service provider Chipbond Technology's latest strategic investment deployments in China are mainly designed to consolidate its market share there amid the increasingly fierce competition and changing market climate, company chairman Wu Fei-jian has said.
Wu told a recent press conference that Chipbond has decided to unload a 53.69% stake in its subsidiary Chipmore Technology, a subsidiary in Suzhou, Jiangsu Province of China, to three China strategic investors. Under the deal, Hefei City Government Fund will become the largest shareholder of Chipmore with a 48% stake, followed by Chipbond with 32%, with the remainder to be shared by Beijing Kinetic Energy Investment Fund and ESWIN as well as other minor investors.
Wu said that the Beijing Kinetic Energy Investment Fund involves capital from BOE Technology Group, a leading China supplier of semiconductor display technologies, products and services.
Strategic investment considerations
Wu said the China investors do not aim to own an IC packaging and testing plant, but to access related technologies and secure investment gains. And for Chipbond, introducing funds from China investors is mainly to safeguard its high share of the China market from being cannibalized by newly emerging players in the China driver IC industry, Wu revealed, adding that Chipbond has reached agreements on the Chipmore deal with the three China strategic investors following three years of negotiations.
Wu stressed that as none of the three China investors have been engaged in the driver IC packaging and testing field, Chipbond will surely continue to dominate the technology developments of Chipmore, and the company hopes to effectively cement or even boost its share of the China market.
Furthermore, Chipbond will invest CNY240 million (US$36.4 million) to set up a carrier tape manufacturing plant in Hefei City also with the same three China investors, with a 30% stake in the joint venture. Wu said the investment is mainly to cash in on the growing China market demand for carrier tapes, which are used in COF (chip on film) packaging of driver ICs used in smartphone panels. Though there are no similar plants operating in China for the moment, many related players are actively planning to set up plants there.
Bright prospects for driver IC packaging in 3 fields
Wu also expressed optimism about revenue prospects for driver IC packaging and testing in 2018, especially in three application fields - COF, TDDI IC and OLED - while non-driver IC packaging and testing will also see robust demand from the power amplifier, sensors and filters sectors.
Wu said the packaging of high-end smartphone-use driver ICs is shifting from COG (chip on glass) to COF, which, accompanied by demand for carrier tapes, entails much higher prices than COG. As TDDI IC must undergo an additional touch test and a wafer bumping can carry fewer such ICs, IC packagers will find more business in this segment, he continued, adding that as China panel makers are also actively deploying production of OLED panels, Chipbond is receiving orders from China for packaging and testing driver ICs for OLED panels.
Chipbond sees 75% of its revenues coming from driver IC packaging and testing services in 2017, while the non-driver IC segment contributes 25%, up from 18% in 2016. The company expects revenues from both segments to rise significantly in 2018, when its capital expenditure is likely to exceed the 2017 level of over NT$5 billion (US$166.65 million), according to Wu.
Chipbond chairman Wu Fei-jian.
Photo: Julian Ho, Digitimes, December 2017
