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UTAC CEO bullish on company, industry growth


Jonathan Hopfner
EE Times
(06/14/2005 12:11 PM EDT)

http://www.eetimes.com/news/semi/showArticle.jhtml?articleID=164302973

SINGAPORE — United Test and Assembly Center (UTAC) Ltd. is confident of strong growth in 2005 and subsequent years on the back of favorable market conditions and the company's blossoming network of alliances in China, UTAC Group President and CEO JC Lee said in an interview.
Lee said Tuesday (June 14) that the test and assembly solutions provider was likely to meet revenue targets of $300 million this year, up from just over $246 million last year, after registering 74.5 percent growth year-on-year last quarter. It also expects strong performance across the wider semiconductor sector.

UTAC's clients include Infineon, Qualcomm and Hynix Semiconductor.

"People forecasted that 2005 is going to be a relatively flat year, but they seem to be getting more bullish, and the industry is adjusting to the positive side," Lee said. "A lot of inventory issues have been corrected over the last six months and from our customers' side orders have picked up quite healthily from the end of March."

Lee added that companies "are keeping their inventory quite low, the industry has not added a lot of excess capacity and I think people are more prudent as far as investment concerned, which is a good sign."

UTAC is also relying on its "twin growth engine" of cultivating its memory and logic capabilities to distinguish itself from its competitors, Lee said.

"On the memory side we're continuously moving into the higher-end; in DDR-2, mobile RAM and so on, we have a wide customer base that is serving us very well. On the logic and wireless sides, we also participate in the market, in things like wireless broadband and WiMAX," he said.

The company has also been working aggressively to boost its presence in China. Last month, it teamed up with China's Semiconductor Manufacturing International Corp. (SMIC) to open a joint IC packaging and test facility in Chengdu, and in April signed a contract with nine Chinese fabless companies to become their preferred turnkey test and assembly provider.

Lee said the moves were part of UTAC's effort "to position ourselves in a high-growth sector."

"China is definitely an important base in the years to come," he added. "Up until now most semiconductor products in China are imported, but we can see that they're trying to add local content, and the number of foundries is going up, so they need the back-end work, and that's where we come in."

"The fabless companies in China [are] going to catch on to the design part of the product," he added. "They still have some way to go, but the learning curve will be shorter."

Irwin Lim, UTAC's group vice president for corporate services, confirmed that the listing of the company's joint venture with SMIC was in the pipeline, but said it was unlikely to happen in the short term.

"The plan is for in three to four years," he said. "As for which market to [make the initial public offering] in, it depends on which is attractive at the time. It could be Singapore, it could be Hong Kong."

CEO Lee said UTAC would continue to review its technology strategy on a quarterly basis to keep abreast of changes in the market, and would actively seek complimentary alliances with other companies.

"The industry is definitely going through a lot of consolidation, and I think companies would like to find ways to leverage on each other's strengths so we don't do over-ordering or have excess capacity and compete with each other unnecessarily," he said. "In certain parts of the business model it makes sense to cooperate."