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Tongfu Microelectronics Chairman's Letter of Gratitude to All Sectors for Completing the Acquisition of 85% Equity in Two AMD Packaging and Testing Facilities

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2016-04-29

Dear friends from all sectors of society, on behalf of the Tongfu Microelectronics Board of Directors, I am pleased to announce that on April 29, 2016, we completed the acquisition of 85% equity stakes in both AMD Suzhou and AMD Penang, investing a total of US$371 million. As the controlling shareholder, Tongfu Microelectronics has successfully established an integrated circuit packaging and testing joint venture company together with AMD. The joint venture’s trademark is TF-AMD.

This acquisition represents a significant strategic partnership between Tongfu Microelectronics and AMD.

Tongfu Microelectronics is a leading enterprise in China's integrated circuit packaging and testing industry. Upholding its corporate culture of "people-oriented, serving the nation through industry, inheriting civilization, and pursuing excellence," the company has achieved remarkable growth over the past two decades. Headquartered in Nantong City, Jiangsu Province, China, Tongfu Microelectronics encompasses subsidiaries such as Tongfu Microelectronics, Nantong Tongfu, and Hefei Tongfu. Together with the two newly acquired joint ventures—Suzhou and Penang—these entities now form the thriving Tongfu Microelectronics family.

AMD is a leading company in the computing industry, specializing in the design and manufacturing of innovative microprocessors (CPUs, GPUs, APUs, motherboard chipsets, TV card chips, and more), as well as flash memory and low-power processor solutions tailored for the computer, communications, and consumer electronics sectors. It is a semiconductor firm capable of delivering three core components: high-performance CPUs, cutting-edge discrete graphics GPU chips, and advanced motherboard chipsets. AMD also boasts world-class, state-of-the-art integrated circuit packaging and testing technologies for premium processors.

The strategic collaboration between Tongfu Microelectronics and AMD holds profound strategic significance—both for Tongfu Microelectronics itself and for the advancement of China's cutting-edge integrated circuit packaging and testing technologies.

For Tongfu Microelectronics, collaborating with and forming joint ventures alongside AMD has enabled the company to achieve world-class expertise in advanced packaging and testing technologies for high-end processor chips, significantly enhancing Tongfu Microelectronics' service capabilities and competitive edge in the premium packaging and testing segment. Both joint ventures focus exclusively on cutting-edge packaging solutions such as FCBGA, driving the entire Tongfu Microelectronics Group to generate over 70% of its packaging revenue from advanced packaging technologies—placing the company firmly at the industry’s forefront. Following the consolidation of financial statements, Tongfu Microelectronics is poised to rise into the global top six in the packaging and testing sector, solidifying its position among the world’s leading packaging and testing firms.

For China's integrated circuit industry, the industrialization of advanced processor chip packaging and testing—critical for achieving domestic autonomy and control—has long been hampered by foreign technology monopolies, leaving the sector virtually untouched. Through this collaboration, Tongfu Microelectronics Group, including two joint ventures, will gain full licensing rights to utilize AMD's cutting-edge packaging and testing technologies as well as its proprietary patents. In particular, the Suzhou factory, serving as a flagship facility for high-end processor chip packaging and testing, will effectively fill the nation's existing gap in this vital area. This will enable the company to better support the research, development, and mass production of domestically produced CPUs, GPUs, gateway servers, base station processors, FPGAs (field-programmable gate arrays), and other key products, ultimately contributing to the nation's information security efforts.

The joint venture embodies the powerful collaboration and strategic partnership between Tongfu Microelectronics and AMD. As AMD's primary packaging and testing supplier, the joint venture will continue delivering high-quality, cutting-edge packaging and testing services to AMD. At the same time, Tongfu Microelectronics will leverage its robust customer network and extensive OSAT expertise, capitalizing on the joint venture’s established, state-of-the-art packaging platform to help the company expand its advanced testing services beyond AMD—enabling a seamless transition from an internal testing facility to a globally oriented OSAT provider.

The joint venture needs to gradually find its rhythm, moving from mere partnership to true collaboration, and evolving from a humble start to exceptional excellence. The key is to get off to a strong beginning and take that all-important first step. The two joint ventures will operate as independent legal entities, maintaining both business autonomy and mutual cooperation. Each of the two joint venture chairpersons will be appointed by Tongfu Microelectronics, ensuring continuity in leadership. Meanwhile, the original management and technical teams—rich in expertise and experience in advanced processor chip packaging and testing—will remain intact. At the same time, we’re committed to preserving the stability of personnel across both joint ventures, doing our utmost to retain the existing management, technical staff, production operators, and other relevant employees. With a focus on ensuring a smooth transition and fostering collaborative innovation, the teams from Tongfu Microelectronics, AMD, and the joint ventures are working closely together. They’re meticulously preparing for critical tasks such as the seamless introduction of AMD’s new products, the onboarding of fresh customers, and the steady operation of the joint ventures—setting the stage for a promising and successful start.

This strategic collaboration between Tongfu Microelectronics and AMD to jointly establish a high-end packaging and testing cooperation platform marks an important step for Tongfu Microelectronics in advancing its internationalization and group-based development strategy. On this occasion, I would like to extend my sincere respect to our partner, AMD, as well as to AMD CEO, Ms. Lisa.

Thank you to the National Integrated Circuit Industry Development Fund. This acquisition has received strong support from the National Big Fund. This strategic partnership not only represents Tongfu Microelectronics' forward-looking business strategy but also aligns with the nation's broader vision for the integrated circuit industry—it is a clear reflection of the country’s strategic goals and unwavering determination.

Thank you for the continuous support and assistance from the nation's major science and technology programs, which have propelled our technology forward at an unprecedented pace—and have positioned us as a partner of choice for international companies.

We would like to express our heartfelt gratitude to the leaders of government departments at all levels— including the National Development and Reform Commission, the Ministry of Industry and Information Technology, and Jiangsu Province—for your unwavering support over the years. Thanks to your assistance, this acquisition has been successfully completed.

Thank you to our partners, friends across the industry—both upstream and downstream—as well as colleagues from industry associations, securities firms, media outlets, and all other sectors for your care and support.

Thank you to our team for all your hard work on this!

Finally, as the Chairman of Tongfu Microelectronics, I would like to once again express my sincerest gratitude to all leaders and friends from various sectors who have shown their care and support for the company’s development. We will certainly live up to the trust and goodwill of everyone involved, striving to deliver even better performance that rewards our customers, shareholders, and society as a whole.

Thank you, everyone!

Shi Mingda, Chairman of Tongfu Microelectronics

April 29, 2016

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