Industry rumors have circulated that Siliconware Precision Industries (SPIL) is in talks with United Microelectronics Corporation (UMC) about a takeover of UMC's holdings in testing company King Yuan Electronics Company (KYEC). SPIL may also consider purchasing additional shares on the open market.
Both SPIL and UMC have denied the speculation. UMC clarified the company holds a minority stake in KYEC and has no plans to dispose of it.
The sources claimed that SPIL is mulling buying UMC's 3.28% stake in KYEC through a share swap, as the first step towards some form of integration between SPIL and KYEC. The sale, worth between NT$750 million and NT$800 million (US$25.7 million) or NT$19-20 a KYEC share, will allow UMC to hold certain SPIL shares, the sources indicated.
After the deal, SPIL might go ahead and buy more of KYEC's outstanding shares on the open market, the sources speculated.
KYEC shares closed at NT$16.65 on January 5, up NT$0.40.
KYEC was quoted as revealing in previous reports that more than 30% of its revenues will come from international IDM clients in 2011, up from 25% in 2010. The company used to depend more on Taiwan's fabless IC designers for revenue growth. In addition, KYEC expects its in-house testers to generate 20% of revenues in 2011 from about 12% in 2010, which would allow it to spend less on equipment and lower production costs.