Singapore-listed semiconductor firm Stats ChipPac will be relocating its Shanghai plant as the land on which the facility now sits has been re-zoned by the local authorities.
Stats ChipPac Shanghai (SCC) now takes up a 983,000 sq ft packaging and test operation facility in Xujing Town.
"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 yesterday.
The firm added that it will be working with the Qingpu Land Planning Bureau, the Qingpu District Land Reserve Centre and the Shanghai Qingpu District Xujing Town House and Land Expropriation Compensation Office to transfer the land currently occupied by SCC to the 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 (S$220 million).
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 it the right to continue to use the rest of the land for the manufacturing plant until SCC relocates to its new site or until Dec 31, 2017, whichever comes first.
"The company has retained... consultants to assist in the evaluation and selection of a new site for the China plant," Stats ChipPac said.
"To ensure minimal disruption to its China operations, the company anticipates that any new site selected for the China plant will be located in proximity to the current location of the China plant and that the relocation of the China plant to its new site will take place only in late 2017."
The announcement came just after Stats ChipPac said on Tuesday that China's largest electronics packaging service provider has made a "pre-conditional offer" to take it over at 46.6 cents a share.
Jiangsu Changjiang Electronics Technology and Stats ChipPac have been in exclusive talks over a possible takeover deal since early last month and had earlier extended the deadline on their negotiations twice.
This article was first published on Jan 02, 2015.
Get a copy of The Straits Times or go to straitstimes.com for more stories.