The same is true for the packaging and testing plant. Customer resources are the most important core barriers for packaging and testing manufacturers, because it is a long process for the packaging and testing factory to develop customers, but once the certification is passed and mass production begins, customers will be very stable and sticky, and packaging and testing will rarely be replaced in the future. plant.
Changdian Technology and ADI reach strategic cooperation
On December 24, Changdian Technology announced that the company has reached a strategic cooperation with Analog Devices Inc. (referred to as "ADI"). Changdian Technology will acquire ADI's test plant in Singapore, and will launch a new plant in the newly acquired plant. Many ADI test services. The final ownership of the above plant will be transferred to Changdian Technology in May 2021.
Steve Lattari, senior vice president of global operations and technology at ADI, said: "This agreement with our long-term packaging and testing partner, Changdian Technology, will enable ADI to take full advantage of the years of operation and test engineering that we have accumulated as a customer at its Singapore plant Expertise, "Lattari continued." We look forward to a smooth transition and let us work together to start a new partnership. "
Zheng Li, Chief Executive Officer of Changdian Technology, said: "ADI has always been a long-term customer that Changdian Technology attaches great importance to. This opportunity will not only expand our test site in Singapore, but more importantly, the signing of the strategic business agreement with ADI will Create more cooperation opportunities for both parties. "Zheng Li went on to say:" The investment in new projects at the Singapore factory also shows that as a multinational chip manufacturing company, Changdian Technology will continue to steadily strengthen its global presence and provide international and local Chinese Customers provide first-class integrated circuit products and advanced technical services. "
Obviously from the discussion between the two parties, after the acquisition of ADI's test plant in Singapore, Changdian Technology will take more orders from ADI. This business model has already been proven in the field of packaging and testing.
As early as 2015, Tongfu Microelectronics invested approximately 370 million US dollars to acquire AMD's Suzhou plant and Malaysia's Penang plant, thereby deeply binding AMD. At present, the cooperation period between Tongfu Microelectronics and AMD has been extended from the previous three years to 5 years, and 7nm chip products have been produced for it. Since then, about half of Tongfu Microelectronics' revenues have come from AMD, and profits have also come from AMD.
In addition, Hi-Ti Semiconductor is a semiconductor packaging and testing company jointly established by Tai Chi Industry and South Korea's SK Hynix. Therefore, Hi-Ti Semiconductor mainly undertakes post-process services for Hynix DRAM products. At present, the cooperation between the two parties has exceeded ten years, and SK Hynix contributed More than 20% of Taiji Industrial's revenue.
At present, Changdian Technology has six factories in China, Singapore and South Korea. Its Singapore factory was established in 1994 and is one of the earliest packaging and testing (OSAT) manufacturing service providers in Singapore. The testing services of Changdian Technology's Singapore factory include wafer testing, packaging product testing, strip-level testing, wafer bumps and all wafer-level product testing.
In recent years, in order to avoid tariffs, improve technical strength and obtain customer resources, domestic manufacturers including Tongfu Microelectronics, Huatian Technology, and Changdian Technology have successively acquired packaging and testing plants in Malaysia and Singapore. The acquisition of ADI's test plant in Singapore should also be considered in this regard.
However, what exactly is the technical strength of ADI's test plant in Singapore? What is the output value? How many orders this acquisition can bring to Changdian Technology is worth pondering.
ADI has already announced the plant to be closed
The author has learned from various sources that ADI's test plant in Singapore was acquired by Linear in 2017 and has undertaken 90% of Linear's testing work. Linear has two test plants in Singapore. One was established in 1989 and the second was opened in 2016.
According to ADI's financial report disclosed in November 2019, ADI has a total of 384,000 square feet of wafer testing and packaging, warehouse and distribution, engineering, sales and administrative offices in Singapore.
It is worth noting that the land leases used for the facility will expire from 2021 to 2022, with the option to extend each lease for another 30 years.
At the same time, ADI pointed out in the financial report that the company's net assets of Singapore's plant and equipment were 88.385 million US dollars (about 618 million yuan).
According to reports, ADI's fiscal year 2017 revenue was US $ 5.246 billion (about 36.704 billion yuan), of which Linear's revenue was US $ 913 million (about 6.39 billion yuan), accounting for 17% of ADI's total revenue. (Since 2018, ADI did not disclose the revenue of Linear separately. I can only compare the revenue of both parties in 2017.)
Therefore, if it is not at a premium, Changdian Technology may spend 618 million yuan to acquire the plant, and the lease of the land basically expires when the ownership is transferred, and the lease needs to be extended by itself. And continuing to undertake the testing of Linear, although it is quite helpful to the business of Changdian Technology, but the business volume will not be too large.
In addition, ADI decided to close the Singapore test plant as early as fiscal 2018, and prepared for this, began to provide channel inventory and increase the company's inventory.
ADI wrote in its financial report that the company decided to merge some of the wafer and test businesses in the acquisition in FY2018, and stated that as part of the acquisition of Linear, in the next one to three years, we plan to close the California location. Hillview Wafer Manufacturing Facility in Milpitas, State and Test Facility in Singapore. We intend to transfer Hillview wafer manufacturing production to our other internal facilities and external foundries. In addition to our outsourced assembly and testing partners, we also plan to transfer the testing operations currently handled at our Singapore plant to our facilities in Penang, Malaysia and the Philippines.
ADI also noted that the company also prepared a special fee, including severance and fringe benefits, based on the company's current benefit plans or statutory requirements abroad, and a one-time termination benefit for approximately 1,100 manufacturing, engineering, and SMG & A employees.
Therefore, this acquisition is beneficial to ADI. ADI originally planned to directly close the Singapore factory. It currently faces the expiration of the land lease and needs to spend a lot of money to dismiss employees. If it is acquired by Changdian Technology, ADI can reduce its expenses and obtain a Acquisition costs.
It is worth noting that the above financial report was disclosed by ADI in the annual report on November 26. One month ago, ADI also planned to transfer the testing business handled by the Singapore factory to its factories in Penang, Malaysia and the Philippines. However, Changdian Technology did not disclose the specific content of the strategic cooperation agreement. Therefore, the scope of the cooperation between the two parties is unsure whether the test business of Linear will be taken over by Changdian Technology, or the answer to the question of more ADI's business is unknown.