The companies have entered into i) a foundry services agreement under which Fujitsu will manufacture wafers for ON Semiconductor, and ii) a definitive agreement pursuant to which ON Semiconductor will become a minority shareholder of Fujitsu’s 8-inch wafer fab in Aizu-Wakamatsu, Japan
YOKOHAMA, Japan and PHOENIX, Ariz., U.S. – July 31, 2014 – Fujitsu Semiconductor Limited and – ON Semiconductor Corporation (Nasdaq: ONNN) today announced that they have entered into a foundry services agreement. Under the terms of this agreement, Fujitsu will manufacture wafers for ON Semiconductor at its 8-inch front-end semiconductor wafer fabrication facility located in Aizu-Wakamatsu, Japan. Initial production of wafers is expected to begin within a year from today and ON Semiconductor will have the opportunity to access additional capacity in the Aizu-Wakamatsu fab in the future.
To build a stronger partnership, the two companies have also entered into a definitive agreement under which ON Semiconductor will obtain a 10 percent ownership interest in a newly formed subsidiary of Fujitsu Semiconductor that will include Fujitsu’s 8-inch Aizu-Wakamatsu fab. The consideration to be paid by ON Semiconductor for this minority interest will be ¥700 million (approximately $7 million). The transaction is expected to close during the fourth quarter of 2014 or in early 2015, subject to certain regulatory approvals and other closing conditions.
“We believe that growth of the new company will contribute to the development of the region, as well as to maintaining employment,” said Haruki Okada, president of Fujitsu Semiconductor Limited. “We expect that the agreements for the foundry services and the acquisition of minority stake of the 8-inch fab by ON Semiconductor will greatly boost the businesses of both companies.”
“This is a strategic investment for ON Semiconductor to secure additional manufacturing capacity, to support our production needs and revenue growth in coming years,” said Keith Jackson, president and CEO of ON Semiconductor. “We believe these agreements with Fujitsu Semiconductor will enable us to maintain our industry-leading manufacturing cost structure and also help us optimize our capital spending in coming years.”
About Fujitsu Semiconductor Limited
Fujitsu Semiconductor Limited designs and manufactures semiconductors, providing highly reliable, optimal solutions and support to meet the varying needs of its customers. Products and services include Customized SoCs (ASICs), Foundry Service, ASSPs, and Ferroelectric RAMs (FRAMs), with wide-ranging expertise focusing on mobile, imaging, automotive and high performance applications. Fujitsu Semiconductor also drives power efficiency and environmental initiatives. Headquartered in Yokohama, it was established as a subsidiary of Fujitsu Limited on March 21, 2008. Through its global sales and development network, with sites in Japan and throughout Asia, Europe, and the Americas, Fujitsu Semiconductor offers semiconductor solutions to the global marketplace. For more information, please see: http://jp.fujitsu.com/group/fsl/en/.
ON Semiconductor and the ON Semiconductor logo are registered trademarks of Semiconductor Components Industries, LLC. All other brand and product names appearing in this document are registered trademarks or trademarks of their respective holders. Although the company references its Web site in this news release, such information on the Web site is not to be incorporated herein.
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements related to the consummation and benefits of the strategic partnership between ON Semiconductor (“ON”) and Fujitsu Semiconductor Limited (“FSL”) and the future financial performance of ON. These forward-looking statements are based on information available to ON and Fujitsu as of the date of this release and current expectations, forecasts and assumptions and involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. Such risks and uncertainties include a variety of factors, some of which are beyond our control. In particular, such risks and uncertainties include, but are not limited to, the risk that one or more closing conditions to the transaction may not be satisfied or waived, on a timely basis or otherwise; the risk that the transaction does not close when anticipated, or at all, including the risk that the requisite regulatory approvals may not be obtained; the transaction may involve unexpected costs, liabilities or delays; difficulties leveraging manufacturing capacity; the possibility that expected benefits and cost savings may not materialize as expected; the variable demand and the aggressive pricing environment for semiconductor products; revenues and operating performance; changes in overall economic conditions and markets, including the current credit markets; the cyclical nature of the semiconductor industry; changes in demand for our products; changes in inventories at customers and distributors; technological and product development risks; availability of raw materials; competitors’ actions; pricing and gross margin pressures; loss of key customers; order cancellations or reduced bookings; changes in manufacturing yields; control of costs and expenses; significant litigation; risks associated with international operations including foreign employment and labor matters associated with unions and collective bargaining agreements; the threat or occurrence of international armed conflict and terrorist activities both in the United States and internationally; risks related to new legal requirements; risks and costs associated with increased and new regulation of corporate governance and disclosure standards; and risks involving environmental or other governmental regulation. Information concerning additional factors that could cause results to differ materially from those projected in the forward-looking statements is contained in ON’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other of our filings with the Securities and Exchange Commission. These forward-looking statements are as of the date hereof and should not be relied upon as representing our views as of any subsequent date and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made.