Fujitsu Semiconductor Limited and ON Semiconductor 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."