Alpha and Omega Semiconductor Limited (AOS) has executed a definitive agreement with two strategic investment funds owned by the Municipality of Chongqing, China, to form the previously announced joint venture for a new state-of-the-art power semiconductor packaging/testing and wafer fabrication facility in the Liangjiang New Area of Chongqing (the "Joint Venture").
The initial capitalization of the Joint Venture under the agreement will be $330 million. This reflects cash contributions, primarily from the Chongqing funds, as well as existing packaging and testing equipment from AOS, and certain AOS intellectual property relating to packaging and wafer manufacturing technology. AOS will own 51%, and the Chongqing funds will own 49%, of the equity interest in the Joint Venture. The Joint Venture agreement is subject to approval by the relevant Chinese authorities.
"We are excited to begin this partnership, which we believe will enable both AOS and Chongqing to grow and prosper," said Dr. Mike Chang, chairman and CEO of AOS. "This joint venture with Chongqing represents an important milestone in our strategic roadmap. It will help further diversify our offerings of power semiconductor products and improve our access to customers in China as we work to accelerate our long-term growth and profitability."
The Joint Venture is expected to commence its initial packaging production in mid-2017. Prior to that, AOS intends to gradually relocate a majority of its assembly and testing equipment to the Joint Venture from its existing facility in Shanghai, which will continue as a center of supply chain management, technology development, and high-value production. Over the longer term, the Joint Venture expects to construct a 12-inch wafer fabrication facility for the production of power semiconductors.
The Joint Venture is designed to bring together the technological and operational capability of AOS in power semiconductor product manufacturing with the capital resources and regional infrastructure support of the Chongqing authority.