SINGAPORE - STATS ChipPAC will be relocating its Shanghai plant as the land on which the facility now sits has been rezoned by local authorities.

STATS ChipPAC Shanghai now takes up a 983,000 sq ft packaging and test operation facility in Xujing Town, Shanghai.

"Recent changes in the long -term zoning, development and construction plans for the West Hongqiao area of China have resulted in the need to relocate SCC by the end of 2017," STATS ChipPAC said in a statement early on Thursday morning.

The firm added it will be working with the Qingpu Land Planning Bureau, the Qingpu District Land Reserve Center and the Shanghai Qingpu District Xujing Town House and Land Expropriation Compensation Office to transfer the land currently occupied by SCC to the relevant local authorities.

The company will also work with the authorities to identify a new location for the manufacturing operation.

Under a compensation agreement, part of the land comprising the parking field for the plant and a green belt surrounding it will be transferred to the authorities by September this year.

In return, the authorities have to provide SCC with an alternative parking area located within five minutes of the current plant.

The authorities will also pay SCC a compensation amount totalling 1.03 billion yuan.

The remainder of the parking field and green belt will be transferred to the authorities after SCC receives half of this payment.

SCC and the authorities will also have to enter into a lease agreement on terms satisfactory to SCC, granting SCC the right to continue to use the rest of the land for the manufacutiring plant until SCC relocates to its new site or until Dec 31, 2017, whichever comes first.