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

TAIPEI, April 1 (Reuters) - Taiwan's ASE (2311.TW: Quote, Profile, Research, Stock Buzz), 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: Quote, Profile, Research, Stock Buzz) 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: Quote, Profile, Research, Stock Buzz) and Freescale as major customers. It competes with other overseas competitors, including U.S.-based Amkor Technology Inc (AMKR.O: Quote, Profile, Research, Stock Buzz) and Singapore's STATS ChipPAC Ltd (STTS.SI: Quote, Profile, Research, Stock Buzz).

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)