Phoenix Semiconductor to invest P7.6B in PH

Phoenix Semiconductor Philippines Corp., the local unit of South Korea’s STS Semiconductor and Telecommunication CO. Ltd., is investing $172 million (roughly P7.6 billion) to expand the capacity of its manufacturing plant at the Clark Freeport Zone in Pampanga.

Of the planned capital outlay, $2 million has already been invested to increase the production of memory chips for personal computers and servers to 65 million units from the current 60 million units annually, Dong Joo Kim, CFO and vice president of PSPC, said in a briefing Thursday.

This increased production of memory chips, all of which are being supplied to Samsung under a six-year contract, is expected to start by August this year, he added.

Kim said the bulk of the additional investment, or the $170 million, would be used to put up a new production facility within the company’s 15-hectare area at the Clark Freeport.

This new manufacturing plant, which will produce some 40 million memory chips for smart devices yearly, is expected to start operations by the fourth quarter of 2015.

These investments are on top of the $700 million that PSPC has already invested in the Clark facility since it began commercial operations in 2011.

Once all the planned investments are completed, the Philippine plant will be STS Semiconductor’s biggest facility in terms of space, and will almost be at par with the Korea facility in terms of production. Aside from the Philippines and Korea, STS also has a facility in China.

The PSPC plant is also the only memory chip semiconductor firm in Southeast Asia, Kim said.

According to Kim, the move to expand company operations in the country was prompted by the increase in demand for these products globally, given the recovery of the US and European economies.

Based on a global market outlook, both semiconductor revenues and demand are expected to increase throughout 2017.

Kim also disclosed that the planned investment would be funded by an initial public offering planned this year, bank loans, and by internally generated cash.

The planned offering of over 570 million primary and secondary shares, representing some 25 percent of PSPC’s total shares, is expected to generate at least P2 billion in proceeds, he added.

Sales this year, meanwhile, are expected to increase by 11 percent to $234 million this year, from the $210 million posted in 2013, given the expected increase in orders from Samsung.

PSPC currently supplies about 25 percent of Samsung’s total requirement for memory chips.

The mid-term contract with Samsung Electronics Co. Ltd., effective from 2011 to 2017, guarantees most of the plant capacity per month, translating into average monthly sales of at least $17.4 million.