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    • STATS ChipPAC to shut up shop in Malaysia »


      The plant closure will affect about 1,100 employees in Malaysia, approximately 11 percent of the firm's total global workforce


      Monday 1st July 2013

      STATS ChipPAC Ltd., a provider of advanced semiconductor packaging and test services, is to consolidate its leaded wirebond packaging and related test operations in Kuala Lumpur, Malaysia into its Qingpu, Shanghai, China operations.

      This will take place over several phases in 2013 and 2014, and the Malaysian plant is anticipated to close down by the end of 2014.

      Tan Lay Koon, President and Chief Executive Officer, STATS ChipPAC, says, "The announced plan will consolidate our manufacturing footprint into larger scale plants and achieve a more competitive cost structure over the longer term."

      The company currently expects to incur total charges of approximately $39 million, comprising employee severance and benefit costs of approximately $19 million, non-cash asset impairment charges of approximately $18 million and other associated costs of approximately $2 million. Of the total charges, approximately $37 million and $2 million will be incurred in the second quarter of 2013 and in 2014, respectively.

      The plant closure will affect approximately 1,100 of the company's employees in Malaysia, representing approximately 11 percent of its total global workforce. STATS ChipPAC says it will ensure that fair severance benefits and outplacement support will be provided to affected employees.

      The consolidation into China will position the company to better engage its customers with broader product offerings and at a more competitive cost structure for its leaded wirebond solutions.

      Outlook

      STATS ChipPAC provided its outlook for the second quarter 2013 on 24 April 2013 when the company expected net revenues to increase approximately 2 percent to 6 percent compared to the prior quarter, with adjusted EBITDA in the range of 21 percent to 25 percent of revenue.

      The company now expects net revenues for the second quarter of 2013 to decrease approximately 3 percent to 4 percent compared to the prior quarter, with adjusted EBITDA in the range of 21 percent to 23 percent of revenue. The firm expects capital expenditure in the second quarter of 2013 to remain at approximately $100 million to $120 million.