Phoenix Semiconductor becomes 1st Korean firm to list at PSE

By Michelle Ong, ANC

Posted at Dec 01 2014 11:58 AM | Updated as of Dec 01 2014 11:30 PM

MANILA (2nd UPDATE) – Another big day at the stock exchange today with the listing of Phoenix Semiconductor Philippines Corp. (PSPC), the sixth for the year.

The company, a major supplier of Samsung (providing 25 percent of Samsung’s total DRAM requirements), is the first Korean company to list at the Philippine Stock Exchange. It is also the Korean company’s first listing abroad.

PSPC is the Philippine-based manufacturing unit of STS Telecommunications, one of the top 15 semiconductor companies in the world and part of South Korea's “Bokwang Group”.

For its initial public offering, PSPC sold 324 million shares at P3.50 each, allowing it to raise about P1 billion, which it said will be used for expansion.

PSPC said institutional investors (mostly bank trusts, pension funds) bought 50 percent of offered shares, the remaining 50 percent by retail market.

Expansion plans

PSPC currently has a plant in Clark, Pampanga, where it produces, assembles and tests about 65 million units of chips every month, all of which go automatically to Samsung and some of Samsung’s end-users like HP, IBM, Cisco and Dell. Most are shipped to China.

With the expansion (purchase of new machines, building improvements) PSPC hopes to boost production by 70 percent, producing 45 million more units per month. The additional production will be allocated for other potential customers outside of Samsung.

PSPC vice president and chief financial officer Dong Joo Kim said they are in talks with clients from Japan and the US and hope to close deals by early next year. This will be very strategic especially since PSPC’s 6-year contract with Samsung will expire by 2017.

Renegotiations are set to begin 2016.

PSPC: No R&D for PH

The company also plans to boost its workforce in the country from the current 1,000 to 2,500 next year.

Kim said the jobs will focus on manufacturing and are unlikely to involve Research and Development.

“High caliber degreed engineers—this is among our biggest problems, some of the best people you have are not inside the country. More prefer to work abroad,” said Kim.

Kim said the company is looking at maximizing South Korea’s strength in R&D and the Philippines’ strength in manufacturing.

PSPC: Manufacturing more fun in the Philippines?

But the Philippines isn’t the only manufacturing hub of STS Telecoms, it also has one in China, though operations there are just half the size of its Philippine operations.

Kim said overall, manufacturing costs in Philippines is 30 percent cheaper compared to China. It is also harder to source workers in China, since locals there prefer to be in the service sector.

As of December 2014, PSPC’s total accumulated investment totals $900 million (started 2010). The planned expansion will cost $173 million, excluding consigned machinery from Samsung. The expansion will be financed in part by IPO proceeds and other credit facilities.

PSPC has registered average monthly sales of $18.1 million during first half of the year.