SOURCE: STATS ChipPAC

STATS ChipPAC

January 31, 2012 18:30 ET

STATS ChipPAC Announces Plan for Its Thailand Plant

SINGAPORE -- 1/2/2012, UNITED STATES--(Marketwire - Jan 31, 2012) - STATS ChipPAC Ltd. ("STATS ChipPAC" or the "Company") (SGX-ST: STATSChP), a leading semiconductor test and advanced packaging service provider, today announced that the Company will not resume assembly operations in its Thailand plant (the "Thailand Plant") due to extensive equipment and facility damages beyond economic restoration. This culminates the Company's completion of an in-depth assessment of the Thailand Plant situated in the Navanakorn Industrial Estate, Pathum Thani, which has been suspended due to the flooding in Thailand during the fourth quarter of 2011.

Partial operations in test and Wafer Level Chip Scale Packaging ("WLCSP") will be supported from the Thailand Plant until the third quarter of 2012. The Company will continue to shift production to its other manufacturing locations in Singapore, Korea and China to support demand from the customers affected by the disruption of the Thailand Plant.

"The decision to not resume full operations in Thailand was painful but unavoidable given the significant damage to our Thailand assembly operational environment that severely affected our ability to support the ongoing demand from our customers. While the Thailand Plant was suspended, we shifted production to other manufacturing locations in order to support ongoing customer demand. The extensive equipment and facility damages and the continuing shift of production to the Company's other manufacturing locations in Singapore, Korea and China have resulted in substantially reduced capability and scale of the Thailand Plant," said Tan Lay Koon, Chief Executive Officer, STATS ChipPAC. "The facility restoration period and the extensive requirements of resuming full production in the Thailand Plant make it uneconomical for the Company to return to full manufacturing operation."

As the Company focuses on shifting production to other manufacturing locations in Singapore, Korea and China to support demand from affected customers, we expect that approximately 1,250 employees, representing 12% of our global workforce, will be affected by the plan to not resume assembly operations and to maintain partial operations in test and WLCSP in the Thailand Plant until the third quarter of 2012. The Company will ensure that fair severance benefits and other support will be provided to the affected employees.

As a result of the announced plan for the Thailand Plant, the Company has incurred flood related charges totalling $55.5 million comprising goodwill impairment ($24.5 million), plant and equipment impairment ($16.3 million), and other related charges ($14.7 million) in the fourth quarter of 2011. The Company expects to file a property damage and business interruption claim with its insurers during the first quarter of 2012. The suspension of operations at the Thailand Plant due to flood accounted for a 7.6% reduction in revenue for the fourth quarter of 2011 compared to the third quarter of 2011.

Forward-Looking Statements
Certain statements in this release are forward-looking statements that involve a number of risks and uncertainties that could cause actual events or results to differ materially from those described in this release. Factors that could cause actual results to differ include, but are not limited to, the timing and impact of the expected closure of the Thailand Plant as well as the estimated associated cost for the closure; the amount of the property damage and business interruption insurance claim due to the flooding of the Thailand Plant; the ability to shift production to other manufacturing locations; shortages in supply of key components and disruption in supply chain; general business and economic conditions and the state of the semiconductor industry; prevailing market conditions; demand for end-use applications products such as communications equipment, consumer and multi-applications and personal computers; decisions by customers to discontinue outsourcing of test and packaging services; level of competition; our reliance on a small group of principal customers; our continued success in technological innovations; pricing pressures, including declines in average selling prices; intellectual property rights disputes and litigation; our ability to control operating expenses; our substantial level of indebtedness and access to credit markets; potential impairment charges; availability of financing; changes in our product mix; our capacity utilisation; delays in acquiring or installing new equipment; limitations imposed by our financing arrangements which may limit our ability to maintain and grow our business; returns from research and development investments; changes in customer order patterns; customer credit risks; disruption of our operations; loss of key management or other personnel; defects or malfunctions in our testing equipment or packages; rescheduling or cancelling of customer orders; adverse tax and other financial consequences if the taxing authorities do not agree with our interpretation of the applicable tax laws; classification of our Company as a passive foreign investment company; our ability to develop and protect our intellectual property; changes in environmental laws and regulations; exchange rate fluctuations; regulatory approvals for further investments in our subsidiaries; majority ownership by Temasek Holdings (Private) Limited ("Temasek") that may result in conflicting interests with Temasek and our affiliates; unsuccessful acquisitions and investments in other companies and businesses; labour union problems in South Korea; uncertainties of conducting business in China and changes in laws, currency policy and political instability in other countries in Asia; natural calamities and disasters, including outbreaks of epidemics and communicable diseases; the continued trading and listing of our ordinary shares on the Singapore Exchange Securities Trading Limited ("SGX-ST"). You should not unduly rely on such statements. We do not intend, and do not assume any obligation, to update any forward-looking statements to reflect subsequent events or circumstances.

About STATS ChipPAC Ltd.
STATS ChipPAC Ltd. is a leading service provider of semiconductor packaging design, assembly, test and distribution solutions in diverse end market applications including communications, digital consumer and computing. With global headquarters in Singapore, STATS ChipPAC has design, research and development, manufacturing or customer support offices in 10 different countries. STATS ChipPAC is listed on the SGX-ST. Further information is available at www.statschippac.com. Information contained in this website does not constitute a part of this release.

Contact Information

  • Investor Relations Contact:
    Tham Kah Locke
    Vice President of Corporate Finance
    Tel: (65) 6824 7788
    Fax: (65) 6720 7826
    email: Email Contact

    Media Contact:
    Lisa Lavin
    Deputy Director of Corporate Communications
    Tel: (208) 867-9859
    email: Email Contact

    STATS ChipPAC Ltd.
    Company Registration No.: 199407932D
    Headquarters: 10 Ang Mo Kio Street 65, #05-17/20 Techpoint
    Singapore 569059
    www.statschippac.com