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Slowing China economy halts $170M facility expansion plan

Posted: 05 Jan 2016 ?? ?Print Version ?Bookmark and Share

Keywords:semiconductor industry? manufacturing facility? memory chip? smart device?

The downturn in China's economy prompted Phoenix Semiconductor Philippines Corp. (PSPC) to suspend its expansion programme for a $170-million factory, according to a Philippine Daily Inquirer report.

PSPC, the local unit of South Korea's STS Semiconductor and Telecommunication Co. Ltd, initially planned to build its phase 2 manufacturing facility in the second half of 2015. The new factory was supposed to increase the production of memory chips, all of which are being supplied to Samsung under a six-year contract, and to serve new customers.

The electronics manufacturer intended to put up the new manufacturing facility beside its existing plant at the Clark Freeport Zone in Pampanga.

"PSPC has already completed the engineering plans and the awarding of the project to general and speciality contractors," PSPC said in a release to the Philippine Stock Exchange.

The decision to postpone 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 said.

"However, negotiations by PSPC with potential new customers are still ongoing," it added.

PSPC, under its initial public offering prospectus, allocated some $9 million of IPO proceeds for the construction of a new manufacturing facility. About $2.85 million was earmarked for the construction of the new building while some $6.15 million was to be spent for the acquisition and installation of production equipment.

The company said the IPO funds will be put in "short-term cash facility until such appropriate time of its utilisation."

Previously, PSPC's Korean parent firm obtained about $2.47 million from a fresh bond and equity float. This was done to deal with liquidity crunch concerns that may fall to the Philippine manufacturing unit.

PSPC management noted that such events involving its parent company would not affect its operations and financial condition, the Inquirer reported.

- Stephen Padilla

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