(Yicai Global) June 28 -- Shenzhen Longsys Electronics is paying USD132 million for a 70 percent stake in a subsidiary of Powertech Technology, a world leader in integrated circuit packaging and testing services, as the Chinese memory storage device maker expands into the chip packaging and testing sector.

The subsidiary, which is based in Suzhou, eastern Jiangsu province, will continue to provide packaging and testing services to its existing clients and will become a packaging and testing base for Longsys’ products, boosting its capacity utilization rate, the Shenzhen-based company said yesterday.

The deal will enable Longsys to cut production costs, respond quickly to clients’ orders and enhance partnerships with memory wafer plants, it added. And Longsys has the right to buy the remaining 30 percent equity should the two parties come to an agreement.

The Suzhou plant used to belong to US flash drive giant Spansion. It was taken over by Powertech in 2009 through a merger of its Singapore and Chinese units. It specializes in the packaging and testing of flash memory chips, memory chips and logic chips.

Longsys’ share price [SHE:301308] closed flat at CNY101.71 (USD14) today. Earlier in the day it sank 6.6 percent to CNY94.85.

Editor: Kim Taylor