Taiwan-based IC testing service provider King Yuan Electronics (KYEC) on December 10 held a groundbreaking ceremony for a factory to be constructed on a 4.61 hectare (11.4 acre) site in Tongluo Site of the Hsinchu Science Park, central Taiwan, with a factory building to be completed by the end of 2013 and come into operation in 2014, according to company chairman Lee Chin-kung.

The factory will be constructed in two phases, with a 4-story factory building in each phase, Lee said. The total construction cost of the first phase is estimated at NT$1 billion (US$34.3 million), Lee noted. Operation of the factory in the first phase will focus on testing image sensors and LCD driver ICs and employ 500-1,000 staff, Lee pointed out. Construction in the second phase is not planned yet, Lee said.

KYEC's testing capacity utilization is below 70% for memory ICs and above 70% for logic ICs, and at an overall level of 67-68% currently. With gross margins of 19.2%, 27.8% and 31.3% for the first, second and third quarters of 2012 respectively, KYEC expects gross margin for the fourth quarter to be less than 30%. KYEC's revenues are expected to see a major uptick in the second quarter of 2013 after staying flat in the previous two quarters due to seasonality.

KYEC estimates capex in 2012 at NT$3.8 billion and plans to set aside a budget of NT$3.5 billion for 2013.