Phoenix shelves $170-M expansion plan

Clark Freeport-based chips manufacturer Phoenix Semiconductor Philippines Corp. (PSPC) has deferred a $170-million factory expansion program, citing gloomy prospects for the semiconductor industry due to China’s economic slowdown.

The construction of PSPC’s phase 2 manufacturing facility was originally planned for the second half of 2015, based on the company’s prospectus when it went public in December 2014.  The electronics manufacturer intended to expand its capacity to produce memory modules and chips to serve new customers.

“PSPC has already completed the engineering plans and the awarding of the project to general and specialty contractors,” PSPC said in a disclosure to the Philippine Stock Exchange.

The new manufacturing facility was planned to rise beside PSPC’s existing plant in Clark.

The deferral of the expansion project is “in line with the slowdown in the demand of semiconductors as a result of the downturn in the economy of China, a major global consumer market and downstream manufacturer of electronics products,” the company explained.

“However, negotiations by PSPC with potential new customers are still ongoing,” it said.

Under the terms announced in PSPC’s initial public offering (IPO) prospectus, some P423.54 million or bulk of P467.67 million in net IPO proceeds was earmarked for the construction of a new manufacturing building and structure.  About P134.25 million was to be spent for the construction of the new facility while another P289.28 million would be used for the acquisition and installation of production equipment and machinery.

“In meantime, the IPO funds will still be placed in short-term cash facility until such appropriate time of its utilization,” the company said.

PSPC’s Korean parent firm earlier raised $116.3 million from a fresh bond and equity float, addressing concerns on liquidity crunch that may cascade to the Philippine manufacturing unit. The liquidity pressures previously cropped out after an investee company of the parent company, STS Semiconductor & Telecommunications Co. Ltd., filed a corporate rehabilitation plan.

The management of PSPC has reiterated that such development involving its parent company would not affect in any way its operations and financial condition.