Amkor completes acquisition of three semiconductor assembly factories

Citation

(2000), "Amkor completes acquisition of three semiconductor assembly factories", Microelectronics International, Vol. 17 No. 3. https://doi.org/10.1108/mi.2000.21817cab.006

Amkor completes acquisition of three semiconductor assembly factories

Amkor completes acquisition of three semiconductor assembly factories

Keywords Amkor Technology, Anam semiconductor, Semiconductors, Mergers and acquisitions

Amkor Technology has completed the acquisition of three semiconductor assembly and test factories (known as K1, K2 and K3) from Anam Semiconductor, Inc. (ASI). In addition, Amkor will be increasing its investment in ASI, whose principal operating asset is a world-class semiconductor wafer foundry located in Buchon, Korea.

The entire transaction, (i.e. the asset purchase plus the equity investment in ASI) is valued at approximately $1.4 billion, and is being funded with a combination of $410 million in private equity capital; $259 million in convertible subordinated notes; and $750 million in bank debt.

James Kim, Amkor's Chairman and Chief Executive Officer, noted that "We are delighted to finally complete this landmark transaction. K1, K2 and K3 are among the world's finest semiconductor assembly factories. They operate with a broad range of semiconductor package technologies and serve what we believe is the industry's largest base of established, fully qualified customers".

Amkor now owns and operates seven semiconductor packaging and test facilities consisting of more than 3.5 million square feet of existing manufacturing and support space, with an additional 1 million square feet of manufacturing space available for expansion. In 1999, these seven factories packaged approximately 4.1 billion semiconductor ICs, representing approximately 6 per cent of the world's consumption of semiconductor chips.

About K1, K2 and K3:

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  K1 – Seoul, Korea 646,000ft² – 3,300 employees.

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  K2 – Buchon, Korea 264,000ft² – 1,800 employees.

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  K3 – Bupyung, Korea 404,000ft² – 1,500 employees.

Located in and around Seoul, Korea, K1, K2 and K3 are established, world-class semiconductor packaging and test facilities with approximately 1.3 million square feet of total manufacturing space. Virtually the entire output of these factories has historically been dedicated to Amkor through a long-term supply agreement with ASI. During 1999 the three factories assembled more than 1.2 billion individual semiconductor ICs, representing a comprehensive range of both traditional and advanced package products.

For the 12 months ending December 31, 1999, K1, K2 and K3 contributed approximately $793 million of Amkor's $1.6 billion in packaging and test revenue. During this period, Amkor recognized a contractual gross margin of approximately 11.5 percent on the revenue derived from these three factories. During the same period, these three factories operated with gross margins similar to the gross margins achieved by Amkor's established factories in the Philippines.

"Now that this acquisition is completed, we will achieve higher operating margins on our overall packaging and test business, since the revenue derived from K1, K2 and K3 will no longer be subject to a contractual gross margin", said Ken Joyce, Amkor's chief financial officer. "In addition, we will generate significantly more EBITDA, which will facilitate the repayment of debt incurred in this transaction".