Notice Concerning a Basic Agreement regarding MegaChips’ Share Purchases

MegaChips Corporation (“MegaChips”) hereby announces that it has reached an agreement with JFE Holdings, Inc. (“JFE”, 5411, First section of the Tokyo stock exchange) to purchase all shares of its 100% subsidiary, KAWASAKI MICROELECTRONICS, INC. (“K-micro”, Mihama-ku, Chiba-city, Chiba pref, President & CEO Yukio Yamauchi), making it a wholly owned subsidiary.

  1. Purpose of Share Purchases From the day of establishment on 4th of April in 1990 in Suita-city of Osaka, MegaChips has been concentrated its management resources on research and development. It is the fabless company focused on R&D as far as manufacturing of LSI products that subcontracts its manufacturing to the leading semiconductor companies in Taiwan and Japan. In the electronic industry, as the pioneer of the fabless company that was unprecedented in Japan at that time, MegaChips has been expanded its operation through development and sales of LSI (large-scale integrated circuit) and relevant software and even System products equipped with self-developed LSI, with top-class application and algorithm, new concept in the field of architecture as well as creative technology. In particular, MegaChips is increasing its business with the strength in development of the customer-specific products and the application-specific products for improving competitiveness of customers' devices. KAWASAKI MICROELECTRONICS, INC., on the other hand, originates in LSI department of former Kawasaki Steel Corporation (current JFE Holdings, Inc.) , and has been focused on ASIC since its start-up of the business and working actively to promote the products of the cell based array and the standard cell for the equipments in the areas of telecommunications, images, information and office automation, and has grown to the leading ASIC maker that supplies the products to top businesses in Japan and overseas. K-micro currently does not own the factory. It is the fabless company like MegaChips, and the leading ASIC vendor that conducts everything from design to quality assurance including wafer fabrication, assembly and test. K-micro develops and improves its business utilizing the subsidiary in the US as the R&D center for the future essential technology development, India branch as the development center and Taiwan branch as the support base for Taiwanese and Chinese customers. MegaChips is determined to combine two companies' capability in order to meet the future requirements of the market and address challenges of domestic and international customers in the field of electronics where the technical innovations drastically advances. The company also seeks to further strengthen strategy and expand the business as the fabless company by providing strong support and total solution from the development stage of algorithm and architecture to wafer fabrication, assembly and testing process.

  2. Basic agreement with JFE Holdings, Inc. MegaChips plans to conclude a stock purchase agreement with JFE in the end of May, 2012 (schedule) and acquire 100% ownership of K-micro. NEWS R


    (2) Location 1-3, Nakase, Mihama-ku, Chiba-city
    (3) Representative President & CEO Yukio Yamauchi
    (4) Principal business Semiconductor integrated-circuit design, manufacture and sales
    (5) Capital 5,046 million yen
    (6) Established 2nd of July, 2001
    (7) Major Shareholders and equity ratio JFE Holdings, Inc. 100%
    (8) Relationships with MegaChips Capital relationships No relevant items.
    Personal relationships No relevant items.
    Transactional relationships No relevant items.
    (9) Company’s consolidated operating results and financial position for the last three years
    Fiscal Year 3/2009 3/2010 3/2011
    Net Asset 9,583 million yen 8,234 million yen 9,241 million yen
    Total Asset 20,862 million yen 21,281 million yen 19,364 million yen
    Consolidated net assets per share 637.22 yen 547.49 yen 614.48 yen
    Gross Revenues 27,849 million yen 24,692 million yen 24,176 million yen
    Group operating profit △4,003 million yen △317 million yen 1,857 million yen
    Consolidated profit △4,213 million yen △911 million yen 1,694 million yen
    Consolidated net income △11,928 million yen △1,423 million yen 1,389 million yen
    Consolidated net income per share △793.12 yen △94.64 yen 92.35 yen
    Dividend per share 0 yen 0 yen 0 yen

  5. Outline of JFE Holdings, Inc.

  6. (1) Name JFE Holdings, Inc.
    (2) Location 2-2-3 Uchisaiwaicho, Chiyoda-ku, Tokyo
    (3) Representative President and CEO Hajime Bada
    (4) Principal business Control of Company by owning stock of operational companies of steel, engineering, shipbuilding and others
    (5) Capital 147.1 billion yen
    (6) Established 27th of September, 2002
    (7) Net Assets 1,478,310 million yen
    (8) Total Assets 3,976,644 million yen No relevant items.
    (9) Major Shareholders and equity ratio

    The Master Trust Bank of Japan, Ltd. (trust account) 6.07%

    Japan Trustee Services Bank, Ltd. (trust account) 4.20%

    Nippon Life Insurance Company 3.68%

    The Dai-ichi Mutual Life Insurance Company 2.47%

    Mizuho Corporate Bank, Ltd. 2.34%

    No relevant items.
    (10) Relationships with MegaChips Fiscal YearNet Asset Total Asset Capital relationships No relevant items.
    Personal relationships No relevant items. 3/2011
    Transactional relationships No relevant items. 9,241 million yen
    Status of related parties No relevant items. 19,364 million yen

  7. Number of Shares to be Acquired, Acquisition Cost and Status of Shares Held before/after Acquisition

  8. (1) Number of Shares Held before Acquisition 0 Shares
    • Number of voting rights:-)
    • Shareholding :-%)
    (2) Number of Shares to be Acquired and Acquisition Cost 15,039,600 Shares
    • (Number of voting rights : 150,396 Shares)
    • (Ratio to Issued Shares : 100%)
    • (Acquisition Cost : 8.5billion yen (schedule))
    (3) Number of Shares to be Held after Acquisition 15,039,600 Shares
    • (Number of voting rights:150,396 Shares)
    • (Shareholding : 100%)

  9. Schedule

  10. (1) Resolution of Board of Directors Meetings 20th of April, 2012
    (2) Agreement date of Stock Transfer End of May, 2012(schedule)
    (3) Date Stock Transfer End of June, 2012(schedule)

  11. Future Outlook
    There is no impact from the acquisition on the results for the fiscal year ending March 2012. The impact on the performance after fiscal year ending March 2013 is currently under review and will be announced immediately after it is defined. Once K-micro becomes a wholly owned subsidiary of MegaChips, the board member and the auditor will be sent to K-micro.