UMS signs pact for joint venture with three Vietnamese precision engineering firms

[SINGAPORE] High-precision semiconductor company UMS Integration on Friday (Jun 5) announced that it has inked a non-binding memorandum of understanding (MOU) to invest about US$3.6 million for a 51.6 per cent stake in a joint venture (JV) company in Vietnam.

The proposed JV will consolidate three Vietnam-based precision engineering and metal plating companies – Viet Nguyen Mechanical Precision Company, Central Metal Mechanical Company and Global Metal Plating Company.

The pact was signed with the founding shareholders of these firms, who will continue to manage the day-to-day operations of the restructured entity.

Under the agreement, UMS will provide strategic guidance, customer development support and operational expertise to the JV.

UMS chief executive officer Andy Luong said: “We can gain from the lower costs and better economies of scale in view of the strong growth in the global semiconductor industry.”

The group noted that the US$3.6 million investment, to be funded by internal resources, is an indicative estimate. The final and binding valuation is subject to review and reassessment following a due-diligence process.

The proposed investment is part of UMS’ drive to expand its manufacturing footprint, enhance its precision engineering capabilities and capture growth opportunities in the semiconductor “super cycle” – described by the company as an unprecedented, artificial intelligence (AI)-driven expansion.

“With more diversified production facilities, we can benefit from early risk mitigation and strong executive alignment across our group operations, as this investment will complement our existing production facilities in Singapore and Malaysia,” Luong added.

The investment will also broaden the group’s geographical footprint to Vietnam, which is styling itself as an alternative to China as a major chip manufacturing hub.

In February, US President Donald Trump opted to remove Vietnam from the US export control list, a move that paves the way for the Asian country to access cutting-edge technologies used in making the most advanced chips once implemented.

The non-binding MOU is not expected to have a material impact on the group’s financial results for the current financial year.