Malaysian semi-conductor firm Unisem said it will buy Advanced Interconnect Technologies for US$70.25 million to enhance its position as a leader in chip assembly and testing.

Advanced Interconnect, incorporated in the Cayman Islands, is an independent provider of semiconductor assembly and test services (SATS), with operations in Indonesia's Batam and the United States.

Managing director John Chia said the purchase, which will be completed in July, will boost Unisem's earnings and production from this year.

"We will leap frog as a combined entity to be among the top-10 largest SATS group in the world by revenue," Chia told reporters.

Keeping capital expenditure down

"The industry has been fragmented for too long with too many players ... there is a need to scale up to have a bigger balance sheet and resources so that customers will perceive you as capable (of outsourcing contracts)," he said.

Advanced Interconnect posted a revenue of US$133.4 million and net income of US$8.8 million last year.

"After the completion of the acquisition, we expect capital expenditure at Advanced Interconnect Technologies to remain minimal at below US$10 million as we do not intend to increase its capacity in Batam in a big way," Chia said.

The Malaysian chip-maker will use internal funds and bank borrowings to fund the purchase.