Stats ChipPac to close KL plant, laying off 1,100 workers

STATS ChipPAC, a provider of advanced semiconductor packaging and test services, says it will close a plant in Malaysia and consolidate its operations in China.

In a statement on June 28, the mainboard-listed company said it will consolidate its leaded wirebond packaging and related test operations in Kuala Lumpur into its Qingpu, Shanghai operations over several phases.

The Malaysia plant is expected to close by the end of next year.

Stats ChipPac president and chief executive officer Tan Lay Koon said: "The announced plan will consolidate our manufacturing footprint into larger scale plants and achieve a more competitive cost structure over the longer term."

Stats ChipPac expects to incur total charges of about US$39 million (S$50.2 million), comprising employee severance and benefit costs of some US$19 million, non-cash asset impairment charges of about US$18 million and other associated costs of about US$2 million.

The plant closure will affect about 1,100 employees in Malaysia, representing about 11 per cent of Stats ChipPac's total global workforce.

The company said it will ensure that fair severance benefits and outplacement support will be provided to affected employees.

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

Separately, Stats ChipPac gave a more downbeat outlook for the upcoming quarter.

It expects net revenues for the second quarter to decrease about 3 per cent to 4 per cent compared to the prior quarter.

In an earlier assessment, the company had expected net revenues to increase about 2 per cent to 6 per cent.

Capital expenditure in the second quarter is expected to remain at about US$100 million to US$120 million.