Stats Chippac

Stats Chippac: Taiwan Semiconductor Manufacturing Company (TSMC), a key client of Stats Chippac, is very optimistic that 2014 will be a double-digit growth year on the back of inventory restocking and seasonal recovery. Following China's award of 4G network licenses last week to the three telecom majors, market watchers now expect a ramp-up of mobile internet usage in China, presenting a very big opportunity for chip companies. Separately, China Mobile inked a distribution agreement with Apple and is expected to start pre-orders for the iPhone tomorrow. This allows Apple to tap on a network with more than 750m subscribers - twice the population of US - the majority (77-80%) of which have yet to upgrade to a 3G service at this point in time. As Apple seeks to diversify its supply chain away from Samsung, TMSC is tipped to emerge as the main beneficiary. The world’s contract chip-maker is slated to be a major manufacturer for Apple's new 20 nanometer A8 processor, which will appear in the new iDevices. Market observers expect that 2015 will be the time when all of Apple products will start using TSMC chips. In turn, Stats Chippac, which offers chip-testing services, could see a flow through of orders from TSMC. At the current price, Stats Chippac valuations are undemanding at 0.54x P/B.