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Spansion, ASE ink JV deal on China facility

Posted: 17 Oct 2008 ?? ?Print Version ?Bookmark and Share

Keywords:China manufacturing plant? joint venture deal? flash memory?

Spansion Inc. and packaging and test company Advanced Semiconductor Engineering Inc. (ASE) have signed a memorandum of understanding (MOU) to establish a joint venture to jointly own the Spansion Suzhou, China final manufacturing facility. Specific terms of the non-binding MOU were not disclosed.

The announcement furthers Spansion's strategy to focus on its own core competencies and establish strategic alliances with industry leaders in final manufacturing. Upon the completion of this transaction the joint venture is expected to allow management to reduce capital expenditures and increase asset utilization through greater economies of scale. Through partnerships, Spansion can focus its resources on growing its position in the wireless and embedded market segments; further diversifying its product portfolio with innovative, next-generation flash memory solutions and accelerating its flash memory process technology roadmap.

"ASE is the world leader in final manufacturing services," said Bertrand Cambou, president and CEO, Spansion. "Through our partnership with ASE, the Spansion Suzhou facility is expected to serve a broader customer base which should result in lower costs through greater economies of scale and increased utilization."

The joint venture complements ASE's existing product, manufacturing and growth strategy, which is focused on providing outsourced assembly and test services for a wide range of semiconductor companies. As such, this joint venture will continue to provide final manufacturing services to Spansion and will also leverage ASE's technology expertise and management resources to serve other companies in this field.

"This joint venture will enable ASE to expand its role in the rapidly growing flash memory segment," commented Jason Chang, chairman and CEO, ASE. "We are excited to see more and more semiconductor companies adopt the asset-light strategy, which leads to the acceleration of outsourcing demand. ASE is well prepared to capitalize on this industry trend and embrace these opportunities."

The Spansion Suzhou facility is the flagship factory in Spansion's final manufacturing network, with approximately 1,100 employees. Operating in China since 1998, the Suzhou facility is certified to ISO 9001:2000 and ISO/TS 16949:2002 as well as ISO 14001 and OHSAS 18001 standards. Operations at Spansion Suzhou include: MCP package development; high-volume manufacturing of MCP, FBGA, and TSOP packages; assembly, test, mark and pack; and customer support.

The final terms of the transaction are subject to the negotiation and entry into of definitive agreements, including a multiyear service agreement. ASE and Spansion plan to complete a definitive agreement in the Q4 08, subject to the completion of necessary regulatory approvals.

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