The topsy-turvy saga of Alphatec Ltd., the Bangkok-based IC assembler that appeared seemingly out of nowhere in 1995 and jumped into second place--as if by magic--just behind giant Amkor-- has the makings of several books. For now, however, we'll have to be content with just several hundred words. Alphatec, and what became the far-flung Alphatec empire, was founded by Charn Uswechoke, a Thai and a finance graduate of North Texas State University. Charn's empire began when he acquired Signetics' former hermetics facility near Bangkok as the cornerstone of Alphatec's packaging business. Before long, he acquired or built several additional plants. Soon, Charn's picture began to appear on the cover of several prominent Asian magazines, and he became the de facto poster child for the hugely successful Asian entrepreneur. One of Charn's more memorable buys was the legendary Indy assembly plant in Manteca, Calif., started by Jake Ratinoff, from the Olin Corp. Tom Reynolds, an Alphatec veteran picks up the story here: "Charn, who in his aggressiveness tried to start two wafer fabs while acquiring multiple companies along the way, leveraged his 86% ownership in the only public company in the group, Alphatec Electronics." Reynolds, now president of ATS Services, Alphatec's sales and marketing arm, says that while Charn was over-leveraging Alphatec Electronics, Thailand itself ran into trouble because of similar leveraging hijinks by real estate developers. Collapse
"Charn didn't see the collapse coming," Reynolds adds. "The banks started to call in their loans and also asked for an audit of Charn's holdings. There was a small problem of $125 million in missing funds that were shown on the balance sheets." Charn, says Reynolds, now faces both civil and criminal litigation for fraud and misrepresentation. There is also separate litigation against KPMG, Charn's auditors. Out of Charn's fall came Alphatec's restructuring. The only two operating companies that were part of the public holdings were the Bangkok plant and 51 percent interest in a plant in Shanghai, China. The other companies were owned by Charn personally (with many operated by relatives). These fell by the wayside. "Alphatec never stopped operating," Reynolds says. During this period a Philips veteran, Willem DeVries, joined the survivors--which included Bob Mollerstuen--"and they kept the thing alive without layoffs." Restructured Alphatec [alphatec.com] was restructured in April 1999, with new equity investments from AIG (American Insurance Group), Hong Kong, and Investor AB, Sweden. Investor is owned by the Wallenberg family, Sweden's largest industrialist. Today, says Reynolds, Alphatec has adopted a strategy focusing on "doing things right in the low leadcount area before jumping into high leadcounts." Alphatec's wide range of PDIPs and SOs, he adds, "Is proving to be a windfall." At this point, Alphatec, he contends, probably has the lowest manufacturing cost of PDIPs and SOs in the world. The company has also launched a few new packages, mainly leadless, all aimed at the analog and high frequency market. A windowed version of the packages addresses sensors for digital cameras. "We're addressing silicon sensors with a package we've developed," Reynolds adds, "and we're working with two sensor companies." Reynolds,
who also survived the yo-yo like contortions of Alphatec's brush
with insolvency says he feels like he's been "to hell and back."
While he admits "the market's helping, our business is growing
like crazy. The performance of our plants in Bangkok and Shanghai
is so good that we can compete with anyone on an even, toe-to-toe
basis."
Shortly after this column was written in September, Tom Reynolds died suddenly. See his obituary in the news section.
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