• Phoenix Semicon sets $173M phase-2 expansion plan

    0

    Newly listed semiconductor firm Phoenix Semiconductor Philippines Corp. (PSPC) said it will invest an additional $173 million in the second phase of the company’s expansion project in the country.

    The $173 million is in addition to the $900 million already invested here since its establishment in February 2011, PSPC Vice President and Chief Financial Officer (CFO) Dongjoo Kim told reporters on Monday as he announced phases 2 and 3 of the expansion plan in a press briefing after the company’s listing on the exchange.

    The company listed its shares on the Philippine Stock Exchange on Monday, raising a total of P1.136 billion from its IPO base offer.

    PSPC is STS Semiconductors’ sole offshore unit to be listed publicly.

    The company’s stock closed unchanged from its P3.15 per share opening price, though it was among the day’s most actively traded issues.

    Asked why the company decided to become public, Kim said the Philippine unit is “faced with huge capital requirements for our expansion efforts. That is why we decided to tap the capital markets.”

    Phase 2 will consist of a manufacturing facility in a 146,363 square-meter leased property in the Clark Freeport Zone in Pampanga, and the acquisition of some machinery and production equipment. The new Pampanga unit will be located in the same complex as Phoenix’s first manufacturing facility.

    The new Pampanga facility will employ 1,000 more people from its current 1,500 employees. The facility consists of a production line unit, material warehouse, utility facilities, substation and generator for emergency power source, and a Samsung warehouse.

    The new manufacturing complex is scheduled to open in 2015.
    BDO Capital & Investment Corp. Senior Vice President Gabriel Lim said that the company will fund the $173 million investment for phase 2 from bank credit facilities (more than 70 percent) and the P1.136 billion initial public offering (IPO) proceeds (less than 30 percent).

    Kim said PSPC’s phase 2 expansion also includes additional supply contracts other than its six-year contract with Samsung Electronics Co. Ltd., and includes “ a big company in Japan and two to three big players in the US.”

    He added that the four contract deals are expected to be closed in the first quarter of 2015, though declining to name the companies they are in talks with.

    Established in February 2011, PSPC is a local unit of South Korean semiconductor giant STS Semiconductor, which manufactures memory chips mainly for Samsung. STS Semiconductors and its subsidiaries are present in South Korea, China and the Philippines.

    In addition to its expansion, the company is planning to branch out in non-memory markets, and an additional facility is also being planned as part of its Phase 3 expansion.

    PSPC’s manufacturing costs in the Philippines are also “30 percent cheaper” than its unit in China. The PSPC vice president and CFO also said the labor market in the Philippines is “competitive,” and suggested that other manufacturers in China may transfer into the Philippines given the higher labor costs in China.

    “In China, it is very hard to outsource people. They are pursuing the service jobs. They don’t want to engage in production lines. But in the Philippines, there is an abundance … The major reason is that the labor force here is very competitive,” Kim said.

    Kyuho Han, PSPC senior manager and team head of finance, said in the same briefing that the company targets monthly revenues of $18.1 million after going public.

    Share.
    loading...
    Loading...

    Please follow our commenting guidelines.

    Comments are closed.