Hon Hai Precision Industry Co. has lost a struggle for control of a Taiwanese semiconductor company that is developing a critical technology used in the latest iPhones and smartwatches.
Siliconware Precision Industries Co. (SPIL) rejected Hon Hai’s plan to increase the chip maker’s share capital, which would have allowed Hon Hai to become the largest SPIL shareholder, the Wall Street Journal reports.
Hon Hai, also known as Foxconn Technology Group, has been locked in a battle for the past two months with Advanced Semiconductor Engineering Inc., the world’s largest chip-packaging company, to gain control of SPIL, the world’s No. 3 chip packaging and testing company by market share.
SPIL plans to expand in the market for system-in-package (SiP) technology which squeezes additional components into a tiny chip.
That allows smartphones and wearable devices to be thinner, more energy-efficient and more powerful.
SiP design is used in Apple Inc.’s iPhone 6s and Apple Watch, and analysts said Hon Hai, ASE and SPIL are targeting billions of dollars in potential revenue and new orders from Apple.
In August, ASE made a US$1 billion tender offer for SPIL shares and subsequently got a 25 percent stake, becoming its largest shareholder.
The tender offer was an attempt to take control of rival SPIL after competition intensified in the chip-packaging industry as fast-growing Chinese competitor Jiangsu Changjiang Electronics Technology Co. acquired fourth-ranked STATS ChipPAC Ltd. earlier this year, analysts said.
To fend off what was seen as hostile takeover bid from Advanced Semiconductor, SPIL announced an alliance with Hon Hai a week later and disclosed plans for a share swap that would have given Hon Hai a 21.2 percent stake in SPIL.
A successful alliance with Hon Hai, which assembles the majority of the world’s iPhones,would have diluted ASE’s stake in SPIL to 19.7 percent, knocking it down from its top shareholder status.
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