NXP Semiconductors, formerly named Philips Semiconductors, and Advanced Semiconductor Engineering (ASX) have signed an agreement to form a joint venture in Suzhou focused on semiconductor testing and packaging.

It is planned that NXP will hold a 40% share while ASE will hold the remaining 60%. Terms of the agreement are subject to final negotiations between NXP and ASE and the receipt of necessary approvals from regulatory authorities. No financial details have been disclosed.

The JV will serve the international and domestic Chinese markets, focusing on testing and packaging of a wide range of semiconductors in areas such as mobile communications, consumer electronics and automotive products. Since the new company will be located at NXP's existing manufacturing site in Suzhou, China, the parties expect that the JV will be able to quickly and efficiently serve customers and meet the required fast time-to-market requirements necessary to compete in the high tech arena.

The JV is expected to begin operations in Q2 2007. NXP will contribute its existing testing and packaging operation in Suzhou as its initial investment into the JV. This JV does not affect the other testing and packaging sites for NXP in Asia and Europe.

"We're pleased to be able to strengthen our relationship with ASE through the formation of this JV and appreciate the willingness of governments to help in this regard," said Ajit Manocha, Chief Manufacturing Officer, NXP Semiconductors. "The JV combines the expertise of both companies to provide high-quality, competitive products to address the needs of electronics manufacturers around the world."