Corporate News

Samsung’s Philippine supplier plans Clark expansion as it looks for new clients

Posted on January 13, 2017

PHOENIX Semiconductor Philippines Corp. is commencing the second phase of its expansion in Pampanga within the year, in anticipation of more clients other than South Korea’s Samsung Electronics Co., Ltd.

In a statement issued on Thursday, the listed company said it will now proceed with the construction of the Phase 2 Expansion Project within its manufacturing center in Clark Freeport.

The project will progress in two stages. PSPC will first construct a manufacturing building with an initial production footprint of 18,000 square meters (sq.m.), a warehouse spanning 1,000 sq.m. along with an expansion power utility building.

The company expects to complete the first stage of the expansion by end-August. Thereafter, it will start bringing in more production equipment, ancillary utilities and support facilities in anticipation of incoming production orders.

Talks between PSPC and prospective customers have moved to advanced stages, the company’s president, Byeongchun Lee, noted in the statement.

The new customers are expected to absorb the additional production capacity from the initial stage of the expansion. The facility will accommodate the semiconductor assembly and packaging contracts of PSPC major shareholder SFA Semicon Co., Ltd. of South Korea as well.

Taking on the semiconductor assembly and packaging contracts of SFA Semicon aligns with the company’s global manufacturing realignment strategy, which entails a diversification into mobile semiconductor products.

“PSPC is foreseen to be a manufacturing hub of the SFA group in Asia providing state-of-the-art semiconductor assembly services to Samsung and other electronics companies around the world,” Mr. Lee said.

The company started its commercial operations in February 2011.

Its major product lines are Dynamic Random Access Memory and memory chips for desktop computer work stations and servers, personal computers, laptops and ultrabooks as well as Samsung-branded memory secured digital cards.

The company raised P468 million from the primary portion of its initial public offering on the Philippine Stock Exchange in December 2014. The proceeds funded the expansion of the Phase 1 production plant, mainly for the installation of the memory card packaging production line, in 2015.

The remainder of the funds raised in 2014 -- in addition to the company’s retained earnings -- will finance the initial stage of the Phase 2 expansion project whose second part will push through in 2021.

“The commencement of the Phase 2 project is a clear testament of the commitment of PSPC and its major shareholder, SFA Semicon, to continue with its investments and to expand its presence in the Philippines,” Mr. Lee said.

PSPC had intended to proceed with the expansion as early as the second half of 2015. It would, however, defer the project because of a slowdown in the global semiconductor industry driven by the downturn in China’s economy.

In the first nine months of 2016, the company booked a 50% year-on-year decrease in net income to $6.02 million from $12.08 million. The decline largely reflects the 31% plunge in revenues because of weaker demand.

PSPC, however, had expected demand to pick up in the final quarter of 2016. It had projected orders of memory devices to increase 31% to 210 million units from the 160 million booked in the third quarter. -- Keith Richard D. Mariano