Taiwan's ASE to invest additional $90 mln in China

TAIPEI, April 1 (Reuters) - Taiwan's ASE (2311.TW), the world's top microchip packager, has approved a plan to invest an additional $90 million in its packaging and testing plant in Shanghai to tap China's fast-growing market.

Advanced Semiconductor Engineering's (ASE) (ASX.N) board gave a green light to the proposal after Taiwan in late March elected a new president, whose party favours closer economic ties with the mainland.

ASE, which also tests microchips for its clients, has invested a total of $310.4 million in China, accounting for 18.7 percent of its capital, the firm said in a statement late on Monday.

Separately, ASE said its board approved a rights issue worth T$1.97 billion ($65 million) to raise funds for expansion. No other details were given.

ASE encases silicon chips in plastic packages so they can be connected to circuit boards and counts Microsoft (MSFT.O) and Freescale as major customers. It competes with other overseas competitors, including U.S.-based Amkor Technology Inc (AMKR.O) and Singapore's STATS ChipPAC Ltd (STTS.SI).

ASE has said it will expand its business on memory chip packaging, and more capacity will be ramping up in China.

At 0313 GMT, ASE's Taipei-listed shares rose 1.4 percent to T$30.00, defying a 0.1 percent fall for the main TAIEX .

ASE has also approved a plan to pay a cash dividend of T$1.71 per share and a stock dividend of 2.9 percent from its 2007 earnings. (US$1=T$30.3) (Reporting by Baker Li, Editing by Ken Wills)