King Yuan Electronics Co (KYEC), one of the world's largest testing and packaging services firms, is set to exit China citing issues arising from US sanctions on semiconductors.

In a statement on its website, Taiwanese KYEC said it had disposed of its entire 92.1 percent stake in its King Long Technology (KLT) subsidiary, a manufacturing hub in the Chinese city of Suzhou.

KYEC sold its share in the company for 4.9 billion yuan ($676 million) to a consortium that included King Legacy Investments, TongFu Microelectronics, and the Shanghai state-owned Enterprises Integrated Improvement and Experiment Private Equity Fund Partnership.

The sale is expected to be completed by Q3 2024, subject to approval from relevant authorities.

In its statement, KYEC said: “Due to the impact of geopolitics on the global semiconductor supply chain, such as [the] United States' restrictions on China's semiconductor industry technology, the ecological environment of semiconductor manufacturing in China has changed, along with intensified market competition.

“KYEC fully considers the environment in which KLT operates, weighs KYEC’s strategic planning for future operational development and growth, and aims for the long-term use of financial resources more effectively. The board of directors has made a decision to withdraw from China’s semiconductor manufacturing business.”

The company added that it will instead focus its resources on Taiwan's semiconductor manufacturing supply chain, working with customers and suppliers to “strengthen fabless advanced process high-end product testing services.”

Once KYEC receives the funds from the sale, the company said the money will be used to accelerate the construction of a new factory to replace the Suzhou site. The company will also invest in high-end testing technology and equipment to meet the demands of AI, HPC, and other related markets.