ALPHA & OMEGA SEMICONDUCTOR Ltd (Form: 10-K, Received: 09/09/2011 17:25:52)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________

FORM 10-K

_________________________________

(MARK ONE)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2011

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission file number 001-34717

__________________________

Alpha and Omega Semiconductor Limited

(Exact name of Registrant as Specified in its Charter)



Bermuda	77-0553536
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

Clarendon House, 2 Church Street

Hamilton HM 11, Bermuda

(Address of Principal Registered

Offices including Zip Code)

(408) 830-9742

(Registrant's Telephone Number, Including Area Code)

__________________________________________

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Name of each exchange on which registered
Common Shares, $0.002 par value per share	The NASDAQ Global Market

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer o	Accelerated filer x	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The aggregate market value of the voting shares held by non-affiliates of the registrant as of December 31, 2010 was approximately $216 million.

Based on the closing price of the registrant's common stock as reported on the NASDAQ Global Market on December 31, 2010 (the last business day of the registrant's most recently completed second quarter). The closing price of the registrant's common shares on the NASDAQ Global Market as of December 31, 2010 was $12.83 per share. Shares of the registrant's common stock held by each officer and director and affiliated entities who own 5% or more of the outstanding common stock of the registrant have been excluded in that such persons and entities may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. This calculation does not exclude shares held by persons or entities whose ownership exceeds 5% of the registrant's common stock that have represented to the registrant that they are registered investment advisers or investment companies registered under Section 8 of the Investment Company Act of 1940, as amended.

There were 24,600,229 shares of the registrant's common shares outstanding as of August 31, 2011.

DOCUMENTS INCORPORATED BY RFERENCE

Portions of the registrant's Proxy Statement for the registrant's 2011 Annual Meeting of Shareholders are incorporated by reference into Part III of this Form 10-K to the extent stated herein. The Proxy Statement will be filed within 120 days of the registrant's fiscal year ended June 30, 2011.

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Alpha and Omega Semiconductor Limited

Form 10-K

For the Year Ended June 30, 2011

TABLE OF CONTENTS



		Page
Part I.
Item 1.	Business	1
Item 1A.	Risk Factors	12
Item 1B.	Unresolved Staff Comments	27
Item 2.	Properties	27
Item 3.	Legal Proceedings	28
Item 4.	Removed and Reserved	28
Part II.		29
Item 5.	Market for Registrant's Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities	29
Item 6.	Selected Consolidated Financial Data	32
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	35
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 8.	Financial Statements and Supplementary Data	50
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	51
Item 9A.	Controls and Procedures	51
Item 9B.	Other Information	52
Part III.		53
Item 10.	Directors, Executive Officers and Corporate Governance	53
Item 11.	Executive Compensation	53
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	53
Item 13.	Certain Relationships and Related Transactions, and Director Independence	53
Item 14.	Principal Accountant Fees and Services	53
Part IV.		54
Item 15.	Exhibits and Financial Statement Schedules	54
Signatures		90

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PART I


Item 1.	Business

Forward Looking Statements

This Annual Report on Form 10-K and the documents incorporated herein by reference contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. Forward-looking statements are based on our management's beliefs and assumptions and on information currently available to our management. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “intend,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential” and similar expressions intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause our actual results, performance, time frames or achievements to be materially different from any future results, performance, time frames or achievements expressed or implied by the forward-looking statements. We discuss many of these risks, uncertainties and other factors in this Annual Report on Form 10-K in greater detail in Item 1A.“Risk Factors.” Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this filing. You should read this Annual Report on Form 10-K completely and with the understanding that our actual future results may be materially different from what we expect. We hereby qualify our forward-looking statements by these cautionary statements. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Overview

We are a designer, developer and global supplier of a broad range of power semiconductors. We have a broad portfolio of power semiconductors that we actively market and we seek to continuously add to our product portfolio each year. Our portfolio of power semiconductors is extensive, with over 800 products, and has grown rapidly with the introduction of over 120 new products each year during the past three fiscal years. In addition, our patent portfolio has grown to include 176 patents and 191 patents applications in the United States at the end of fiscal year 2011. We seek to differentiate ourselves by integrating our expertise in device physics, process technology, design and advanced packaging to optimize product performance and cost. Our portfolio of products targets high-volume applications, including portable computers, smart phones, flat panel TVs, battery packs, portable media players, motor control and power supplies.

During the fiscal year ended June 30, 2011, we launched several key product families and technologies to enable high efficiency power conversion solutions. We expanded our MOSFET product family by expanding our high voltage product line with the introduction of the AlphaMOS ^TM and AlphaIGBT ^TM technology platform that lower on-resistance to enable high efficiency AC-DC conversion. The development in high voltage product line enables us to broaden the markets we serve. We also released our third generation EzBuck DC-DC Power IC family which offers higher efficiency and output current to power the latest chipsets used in a wide range of consumer applications. Our new PairFET advanced packaging technology allows high power density DC-DC conversion in computing and communications applications by integrating two MOSFETs in a single package, with the performance of two independent MOSFETs.

We have assembled a team of scientists and engineers globally and have developed an extensive portfolio of intellectual property. Our intellectual property portfolio and technical knowledge encompass major aspects of power semiconductors, providing us with a platform to rapidly introduce innovative products to address the increasingly complex power requirements of advanced electronics.

Our transnational business model leverages global resources, including leading research and development expertise in the United States, cost-effective semiconductor manufacturing in Asia and localized sales and technical support in several fast-growing electronics hubs globally. Our core research and development team, based in Silicon Valley, is complemented by our design center in Taiwan and process, packaging and testing engineers in China. While we currently utilize third-party foundries for our wafer fabrication, we are in the process of transitioning from a fabless to a “fab-lite” business model. Under this model, we intend to allocate our manufacturing requirements to both in-house and outsourced capacities, which we believe would allow us to accelerate technology development, bring products to market faster, reduce manufacturing costs and improve our long-term financial performance. As part of this transition, we recently announced our intention to acquire certain assets associated with a 200mm wafer fabrication facility located in Hillsboro, Oregon from Integrated Device Technology, Inc., or IDT. We also deploy and implement our proprietary power discrete processes and equipment at third-party foundries to maximize the performance and quality of our products. In addition, in December 2010, we acquired control of Agape Package Manufacturing Ltd., or APM in a cash and stock transaction with a purchase price of $40.0 million. After the acquisition, APM

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became our wholly-owned subsidiary. We now primarily rely upon our two in-house facilities for packaging and testing. We believe our in-house packaging and testing capability provides us with a competitive advantage in proprietary packaging technology, product quality, cost, flexibility and cycle time.

We were incorporated in Bermuda on September 27, 2000 as an exempted limited liability company. The address of our registered office is Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. Our agent for service of process in the U.S. for the purpose of our securities filings is our chief executive officer, Mike F. Chang, c/o Alpha and Omega Semiconductor Incorporated, 475 Oakmead Parkway, Sunnyvale, CA 94085. Telephone number of our agent is (408) 830-9742.

We have incorporated various wholly-owned subsidiaries in different jurisdictions. Please refer to Exhibit 21.1 for a complete list of our subsidiaries.

Our industry

Semiconductors are electronic devices that perform a variety of functions, such as converting or controlling signals, processing data and delivering or managing power. With advances in semiconductor technology, the functionality and performance of semiconductors have generally increased over time, while size and cost have generally decreased. These advances have led to a proliferation of more complex semiconductors being used in a wide variety of consumer, computing, communications and industrial markets, a trend that has contributed to the growth of the semiconductor industry.

Analog semiconductors

The semiconductor industry is typically segmented into analog and digital. Analog semiconductors handle real world phenomena such as light, sound, motion, radio waves and electrical currents and voltages. In contrast, digital semiconductors, such as microprocessors, microcontrollers, memory and other logic devices, process binary signals represented by a sequence of ones and zeros.

As a result of these fundamental differences, the analog semiconductor industry is distinct from the digital semiconductor industry in terms of the complexity of design and the length of product cycle. Improper interactions between analog circuit elements can potentially render an electronic system inoperable. Experienced engineers and manual intervention in the design process are necessary because computer-aided design cannot fully model the behavior of analog circuitry. Therefore, experienced analog engineers with requisite knowledge are in great demand but short supply worldwide. In addition, analog semiconductors tend to have a longer life cycle, usually three to five years, because original design manufacturers, or ODMs and original equipment manufacturers, or OEMs typically design the analog portions of a system to span multiple generations of their products. Once designed into an application, the analog portion is rarely modified because even a slight change to the analog portion can cause unexpected interactions with other components, resulting in system instability.

Power semiconductors

Power semiconductors are a subset of the analog semiconductor sector with their own set of characteristics unique to power architecture and function. Power semiconductors transfer, manage and switch electricity to deliver the appropriate amount of voltage or current to a broad range of electronic systems and also protect electronic systems from damage resulting from excessive or inadvertent electrical charges.

Power semiconductors can be either discrete devices, which typically comprise only a few transistors or diodes, or ICs, which incorporate a greater number of transistors. The function of power discretes is power delivery by switching, transferring or converting electricity. Power transistors comprise the largest segment of the power discrete market. Power ICs, sometimes referred to as power management ICs, perform power delivery and power management functions, such as controlling and regulating voltage and current and driving power discretes.

The rapid growth of the power semiconductor market in recent years has been driven by the proliferation of computer and consumer electronics, such as desktop computers, notebooks, smartphones, flat panel displays and portable media players that require sophisticated power management to improve power efficiency and extend battery life. The evolution of these products is characterized by increased functionality, thinner or smaller form factors and decreasing prices.

Today, integrated consumer electronic devices require multiple and separate voltages to power all of these functions properly. These complex power requirements generate heat and reduce battery life. At the same time, consumers demand smaller and thinner devices, making it more challenging to develop efficient power schemes as smaller components have less surface area to conduct and dissipate heat. More processing functions also reduce battery life, which increases the need for the greater efficiency of electronic components. In addition, since the power of a system manages electrical charge, inefficient or poorly performing power components can be potentially dangerous as they may lead to an overload which could result in an explosion or fire. As a result, the task of developing small footprint power components that deliver high efficiency and effective

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heat dissipation becomes very complex, requiring greater technical skills and resources.

The evolution toward smaller form factors and complex power requirements has driven further integration in power semiconductors, resulting in power ICs that incorporate the functionalities of both power management and power delivery functions in a single device. Power ICs can be implemented by incorporating all necessary power functions either on one piece of silicon or multiple silicon chips encapsulated into a single device. Generally, ODMs and OEMs are indifferent as to how the internal circuitry of a device is implemented, as long as the power IC performs to specification and accommodates the desired form factor.

In addition to the shrinking size of power semiconductors, external components, such as inductors and capacitors, must also be reduced in size and quantity. To do this, the operating frequency of the power IC must increase significantly. This increase can only be effectively achieved with MOSFETs that are specifically tailored to the power management IC functions in order to optimize the performance of the device.

Power semiconductor suppliers develop and manufacture their products using various approaches which tend to fall across a wide spectrum balancing low-costs with proprietary technology advantages. At one end of the spectrum are integrated design manufacturers, or IDMs, which own and operate the equipment used in the manufacturing process and design and manufacture products at their in-house facilities. IDMs exercise full control over the implementation of process technologies and have maximum flexibility in setting priorities for their production and delivery schedules. At the other end of the spectrum are completely-outsourced fabless semiconductor companies, which rely entirely on off-the-shelf technologies and processes provided by their manufacturing partners. These companies seek to reduce or eliminate fixed costs by outsourcing both product manufacturing and development of process technologies to third parties. Within opposite ends of the spectrum are companies adopting a variety of business models with varying degrees of focus between technological development and manufacturing capacity. For example, technology-focused fabless semiconductor companies design their own products and develop proprietary process technologies. These companies outsource substantially all of the manufacture of their products to third-party wafer foundries and packaging facilities, and deploy and implement their proprietary technologies using the equipment of their manufacturing partners. In addition, companies with a “fab-lite” model focus on the design of products and process technology, but also utilize efficient, low-cost internal manufacturing capacity, which may be augmented or supported with production capacity at third-party companies for legacy technology production.

Our strategies

The objective of our strategies is to extend our position as a leading designer, developer and global supplier of a broad range of analog semiconductors, specializing in power semiconductors. To accomplish this, we intend to:

Transition to a “fab-lite” business model to bring products to market faster and drive long-term financial performance

We are in the process of transition from a technology-focused fabless semiconductor company to a “fab-lite” business model. Under this model, we intend to allocate our wafer requirements between our internal facility and outsourced capacity, which we believe will accelerate the development of our proprietary technology, lower our manufacturing costs, reduce our product development cycle to bring products to market faster and improve our long-term financial performance. We also expect this “fab-lite” model to provide quicker response to our customer demands, enhanced relationships with strategic customers, flexibility in capacity management and geographic diversification of our wafer supply chain. As part of this transition, we recently announced our intention to acquire certain assets associated with a wafer fabrication facility from IDT located in Hillsboro, Oregon for $26 million, which we expect to close by the end of January 2012. Furthermore, we have expanded our packaging capacity through the acquisition of APM in December 2010, which, together with our existing in-house manufacturing facility, allow us to rely substantially all of our packaging and testing requirements on our in-house facilities. As we continue to grow under this “fab-lite” model, we may establish selected partnership and pursue acquisitions to expand our manufacturing capacity, if we believe these transactions would allow us to reduce the cost of production and improve the quality of our products.

Leverage our power semiconductor expertise to drive new technology platforms

We believe that the ever-increasing demand for power efficiency in power semiconductors requires expertise in and a deep understanding of the interrelationship among device physics, process technologies, design and innovative packaging. We also believe that engineers with experience and understanding of these multiple disciplines are in great demand but short supply. Within this context, we believe that we are well positioned to be a leader in providing total power management solutions due to our extensive pool of experienced scientists and engineers and our strong IP portfolio of over 300 patents and patents applications in the United States covering MOSFET and power IC design, process technology and advanced packaging. Accordingly, we intend to leverage our integrated expertise to increase the number of power discrete technology platforms and power IC designs to expand our product offerings and deliver complete power solutions for our targeted applications.

Apply our technology platforms to introduce new products and expand our addressable market

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We plan to further expand the breadth of our product portfolio to increase our total bill-of-materials within an electronic system and to address the power requirements of additional electronic systems. Our product portfolio currently consists of over 800 products and we have introduced over 120 new products each year for the past three fiscal years. We continue to leverage the depth and breadth of our power expertise to further increase our product lines, including higher performance power ICs and high voltage MOSFETs, in order to expand our addressable market and margin profile. We also believe that our expanding product offerings will allow us to penetrate new end-market applications and will provide us with an important competitive advantage, as OEMs and ODMs generally prefer to limit their supplier base to a smaller set of vendors capable of providing a comprehensive menu of products across multiple electronic platforms.

Increase direct relationships and product penetration with OEM and ODM customers

We have developed direct relationships with key OEMs who are responsible for branding, designing and marketing a broad array of electronic products, as well as ODMs who have traditionally been responsible for manufacturing these products. While OEMs typically focus their design efforts on their flagship products, as the industry has evolved, ODMs are increasingly responsible for designing portions, or entire systems, of the products they manufacture for the OEMs. In addition, several ODMs are beginning to design, manufacture and brand their own proprietary products which they sell directly to consumers. We intend to strengthen our existing relationships and form new ones with both OEMs and ODMs by aligning our product development efforts with their product requirements, increasing the number of our products used within their system, and leveraging our relationships to penetrate their other products.

Leverage transnational business model for cost-effective growth

We intend to continue our transnational business model to leverage global resources and regional strengths. We intend to continue to deploy marketing, sales and technical support teams in close physical and cultural proximity to our end customers, particularly in Asia and the United States. We plan to further expand our technical marketing and application support teams along with our sales team to better understand and address the needs of our end customers and their end-market applications. This will assist us in identifying and defining new technology trends and products and to help us gain additional design wins.

Our products

To serve the large and diverse analog market for power semiconductors, we have created a broad product portfolio consisting of two major categories: power discretes and power ICs. While we derive the majority of our revenue from sales of power discretes products, sales of power ICs has been increasing during the past three fiscal years. Our power discretes consist primarily of proprietary and standard low voltage and high voltage power MOSFETs. The primary function of power MOSFETs is to deliver power, such as switching, transferring or converting electricity. We also offer power ICs which, in addition to delivering power, control and regulate the sequence and rate of power management variables, such as the flow of current and level of voltage.

The following table lists our product families and the principal end uses of our products:



Product Family	Description	Product Categories within Product Type	Typical Application
Power discretes	Low on-resistance switch used for routing current and switching voltages in power control circuits	DC-DC conversion DC-AC conversion AC-DC conversion Load switching Motor control Battery protection	Notebooks, netbooks, desktop and tablet PC's, servers, flat panel displays, TVs, graphics cards, game boxes, chargers, battery packs, AC adapters, power supplies, E-bikes, motor control, smart phones and other portable devices

Power ICs	Integrated devices used for power management and power delivery	DC-DC Buck conversion DC-DC Boost conversion Smart load switching	Flat panel displays, TVs, all-in-one-PCs, servers, DVD/Blu-Ray players, set-top boxes, and networking equipment

	Analog power devices used for circuit protection and signal switching	Transient voltage protection Analog switch Electromagnetic interference filter	Notebooks, netbooks, flat panel displays, TVs, cell phones, and portable electronic devices

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Power discrete products

Power discretes are used across a wide voltage and current spectrum, requiring them to operate efficiently and reliably under harsh conditions. Due to this wide applicability across diverse end-market applications, we market general purpose MOSFETs that are used in multiple applications as well as MOSFETs targeted for specific applications.

Our current power discrete product line includes industry standard trench MOSFETs, electrostatic discharge, protected MOSFETs and SRFETs. Compared to standard MOSFETs, SRFETs generally provide less power loss and reduced switching noise in DC-DC applications, allowing for greater efficiency, less heat, longer battery life and reduced electromagnetic interference. Our MOSFET product line is built on top of successive generations of MOSFET process technology platforms. Typically, each successive generation of MOSFET products is characterized by the following features:


•	improved on-resistance per area of die, allowing for better power efficiency;


•	lower device capacitances reducing power losses during switching operating conditions;


•	smaller footprints suitable for compact and mobile applications; and


•	smaller die sizes, which increase the number of available die per wafer and thereby reduce the overall cost.

We expanded our MOSFET product family by expanding our high voltage product line with the introduction of the AlphaMOS ^TM and AlphaIBGT ^TM technology platforms that lower on-resistance to enable high efficiency AC-DC conversion. The development in high voltage product line enables us to broaden the markets we serve in the area of motor control, power supplies and uninterruptible power supplies (UPS).

Power IC products

In addition to the traditional monolithic or single chip design, we employ a multi-chip approach for our power ICs. This multi-chip technique leverages our proprietary MOSFET and advanced packaging technologies to offer integrated solutions to our customers. This allows us to update a product by interchanging only the MOSFETs without changing the power management IC, thereby reducing the time required for new product introduction. We believe that our power IC products improve our competitive position by enabling us to provide higher power density solutions to our end customers than our competitors.

The incorporation of both power delivery and power management functions tends to make power ICs more application specific because these two functions have to be properly matched to a particular end product. We have local technical marketing and applications engineers who closely collaborate with our end customers to help ensure that power IC specifications are properly defined at the beginning of the design stage.

Following the successful transition to copper wire packaging technology from gold wire packaging for our MOSFET products, we plan to design and manufacture our power IC products using copper wire packaging technology.

Distributors and customers

We have developed direct relationships with key OEMs, most of which we serve through our distributors and ODMs, and they include Dell Inc., Hewlett-Packard Company, LG Electronics, Inc. and Samsung Group. We sell to Samsung Group directly which accounted for 11.5% of our revenue for the fiscal year ended June 30, 2011. In addition, based on our historical design win activities and records from ODMs, we believe that our power semiconductors are also incorporated into products sold to OEMs, including ASUSTeK Computers Inc.

Through our distributors, we provide products to ODMs who traditionally are contract manufacturers for OEMs. As the industry has evolved, ODMs are increasingly responsible for designing portions, or entire systems, of the products they manufacture for the OEMs. In addition, several ODMs are beginning to design, manufacture and brand their own proprietary products, which they sell directly to consumers. Our ODM customers include Compal Electronics, Inc., Foxconn, Quanta Computer Incorporated, AOC International and Wistron Corporation.

In order to take advantage of the expertise of end-customer fulfillment logistics and shorter payment cycles, we sell most of our products to distributors. Under the agreements with our distributors, they have limited rights to return unsold merchandise, subject to time and volume limitations. As of June 30, 2011, the two largest distributors of our products are WPG Holdings Limited, or WPG, and Promate Electronic Co. Ltd., or Promate. Sales to these two distributors accounted for 36.7% and 30.6% of our revenue for the fiscal year ended June 30, 2011, respectively.

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Sales and marketing

Our marketing department is responsible for identifying high growth markets and applications where we believe our technology can be effectively deployed. We believe that the technical background of most members of our marketing team, including technical marketing engineers, helps us better define new products and identify potential end customers and geographic and product market opportunities. For example, we have deployed field application engineers, or FAEs, who provide real-time and on-the-ground responses to our end customer needs, work with our end customers to understand their requirements, resolve technical problems, strive to anticipate future customer needs and facilitate the design-in of our products into the end products of our customers. We believe this strategy increases our share of revenue opportunities within the applications we currently serve, as well as in new end-market applications.

Our sales team consisted of sales persons, field application engineers, or FAEs, customer service representatives and customer quality engineers who are responsible for key accounts. We strategically position our team near our end customers through our offices in Taipei, Hong Kong, Shenzhen, Shanghai, Tokyo, Seoul and Sunnyvale, California, complemented by our field applications centers in Sunnyvale and Shanghai. In addition, our distributors and sales representatives assist us in our sales and marketing efforts by identifying potential customers, sourcing additional demand and promoting our products, in which case we may pay a sales commission to these distributors.

A typical sales cycle takes six to nine months and is comprised of the following steps:


•	identification of a customer design opportunity;


•	qualification of the design opportunity by our FAEs through comparison of the power requirements against our product portfolio;


•	provision of a product sample to the end customer to be included in the customer's pre-production model with the goal of being included in the final bill of materials; and


•	placement by the customer, or through its distributor, of a full production order as the end customer increases to full volume production.

Seasonality

As we provide power semiconductors used in consumer electronic products, our business is subject to seasonality. Our sales seasonality is affected by a number of factors, including global economic conditions, revenue generated from new products, changes in distributor ordering patterns in response to channel inventory adjustments and end customer demand for our products and fluctuations in consumer purchase patterns prior to major holiday seasons. However, broad fluctuations in recent periods in the semiconductor industry conditions and global economic environment have had a more significant impact on our results than seasonality.

Backlog

Our sales are made primarily pursuant to standard purchase orders from distributors and direct customers. The amount of backlog to be shipped during any period is dependent upon various factors, and all orders are subject to cancellation or modification, usually with no penalty to the customers. The quantities actually purchased by the customer, as well as shipment schedules, are frequently revised that reflect changes in both the customers' requirements and in manufacturing availability. Therefore, our backlog at any point in time is not a reliable indicator of our future revenue.

Research and development

Because we view technology as a competitive advantage, we invest heavily in research and development to address the technology intensive needs of our end customers. Our research and development expenditures primarily consist of staff compensation, prototypes, engineering materials, simulation and design tools and test and analyzer equipment. In addition, we are in the process of transition to a “fab-lite” business model, which we believe would allow us to accelerate the development and implementation of our proprietary process technologies, thus enhancing our research and development efforts.

We have research and development employees in our Silicon Valley facility, our Taiwan design center as well as our supporting centers in Shanghai. Following our proposed acquisition of certain wafer fabrication assets of IDT, we also expect to expand our technical team in Hillsboro, Oregon where the wafer fabrication facility is located. We believe that these research and development talents enable us to develop leading edge technology platforms and new products. Our areas of research and development focus include:

Packaging technologies: Consumer demand for smaller and more compact electronic devices with higher power density

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is driving the need for advanced packaging technology. Our group of dedicated packaging engineers focuses on smaller form factor, higher power output with efficient heat dissipation and cost-effectiveness. We have invested significant resources to develop and enhance our proprietary packaging technologies, including the recent establishment of our in-house packaging and testing facility. We focus on packaging and bonding materials as well as bonding and manufacturing techniques. For example, our copper wire packaging technology eliminates the need for gold wire bonding, which reduces the cost of production and improves operating efficiency. We have developed co-packaging technology in which multiple chips are incorporated into a single device allowing design flexibility. We believe that our efforts to develop innovative packaging technologies will continue to provide new and cost-effective solutions with higher power density to our customers.

Process technology and device physics: We focus on specialized process technology in the manufacturing of our products, including vertical and lateral DMOS, Shielded Gate Trench, Schottky Diode and BCDMOS processes. Our process engineers work closely with our design team to deploy and implement our proprietary manufacturing processes at the third-party foundries that fabricate our wafers. To improve our process technology, we continue to develop and enhance our expertise in device physics in order to better understand the physical characteristics of materials and the interactions among these materials during the manufacturing process.

New products and new technology platforms: We also invest significantly in the development of new technology platforms and introduction of new products. Because power management affects all electronic systems, we believe that developing a wide portfolio of products enables us to target new applications in addition to expanding our share of power management needs served within existing applications.

As a technology company, we will continue our significant investment in research and development in our low voltage and high voltage power discretes and power ICs by developing new technology platforms and new products that allow for better product performance, more efficient packages and higher levels of integration.

Operations

The manufacture of our products is divided into two major steps: wafer fabrication and packaging and testing. In order to allocate more resources to research and development, we currently outsource the fabrication of all of our semiconductor wafers. Our in-house packaging and testing facilities handle substantially all of our packaging and testing needs. We also outsource a small portion of our packaging and testing requirements to other contract manufacturers.

Wafer fabrication

We are in the process of transition from a technology-focused fabless company to a “fab-lite” business model. Under this model, we expect to allocate our wafer manufacturing requirements between our internal facility and outsourced capacity, which we believe will accelerate the development of our technology and products, as well as to reduce our manufacturing cost and provide better services to our customers. Pursuant to our existing foundry service arrangement with IDT, we have an option to acquire certain assets associated with its wafer fabrication facility for $26 million, which is exercisable by us from September 1, 2011 to November 15, 2011. IDT granted this option to us in exchange for our entry into the foundry service arrangement and a cash deposit of $5 million, which will be applied against the purchase price. As part of our transition to the "fab-lite" business model, we recently announced our intention to exercise this option prior to the November 15, 2011 deadline and close the transaction by January 31, 2012.

Currently our main foundry is Shanghai Hua Hong NEC Electronic Company Limited, or HHNEC, located in Shanghai. HHNEC has been manufacturing wafers for us since 2002. HHNEC manufactured 68.7% of the wafers used in our products for the fiscal year ended June 30, 2011. We believe that our volume of production allows us to secure favorable pricing and priority in allocation of capacity as compared to fabless semiconductor designers with smaller volumes of production. However, wafer fabrication capacity may fluctuate significantly due to market demands and specific business plans of the foundry. If foundry capacity is constrained, wafer price will increase and the lead time may prolong. The foundries we use typically require four weeks or more to manufacture our wafers and have set levels of capacity and inventories of raw materials. We believe that we generally have reasonably good working relationships with the foundries.

Packaging and testing

Completed wafers from the foundries are sent to our in-house packaging and testing facilities or to our subcontractors, where the wafers are cut into individual die, soldered to lead frames, wired to terminals and then encapsulated in protective packaging. After packaging, all devices are tested in accordance with our specifications and substandard or defective devices are rejected. We have established quality assurance procedures that are intended to control quality throughout the manufacturing process, including qualifying new parts for production at each packaging facility, conducting root cause analyses, testing for lots with process defects and implementing containment and preventive actions. The final tested products are then shipped to our distributors or customers.

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Our in-house packaging and testing facilities are located in Shanghai, China which handle substantially all of our packaging and testing requirements for our products. Our facilities have the combined capacity to package and test over 400 million parts per month and have available floor space for further expansion. We believe our ability to package and test our products internally represents a strategic advantage as it protects our proprietary packaging technology, increases the rate of new package introductions, reduces operating expenses and ultimately improves our profit margins.

Quality assurance

Our quality assurance policy aims to consistently provide our end customers with products that are reliable, durable and free of defects in order to meet or exceed the expectations of excellence and high performance from our end customers. We strive to do so through continuous improvement in our product design and close collaboration with our manufacturing partners to maintain the quality of our products. We received an ISO9001:2000 certification in February 2004 in recognition of our quality assurance standards. ISO9001:2000 is a set of criteria and procedures established by International Organization of Standardization for developing a fundamental quality management system and focusing on continuous improvement, defect prevention and the reduction of variation and waste. In July 2005, we began to offer lead-free products in order to comply with Restrictions on the use of Hazardous Substances, or RoHS.

We maintain a supplier management and process engineering team in Shanghai that works with our third-party foundries and packaging and testing subcontractors to monitor the quality of our products, which is designed to ensure that manufacturing of our products, is in strict compliance with our process control, monitoring procedures and product requirements. We also conduct monthly reviews and annual audits to ensure supplier performance. For example, we examine the results of statistical process control systems, implement preventive maintenance, verify the status of quality improvement projects and review delivery time metrics. In addition, we rate and rank each of our suppliers every quarter based on factors such as their quality and performance.

Our manufacturing processes use many raw materials, including silicon wafers, gold, copper, molding compound, petroleum and plastic materials and various chemicals and gases. We obtain our raw materials and supplies from a large number of sources, adopting vendor-managed inventory and just-in-time delivery. Although supplies for the raw materials used by us are currently adequate, shortages could occur in various essential materials due to interruption of supply or increased demand in the industry.

Competition

The power semiconductor industry is characterized by fragmentation with many competitors. We compete with different power semiconductor suppliers, depending on the type of product lines and geographical area. Our key competitors in power discretes and power ICs are primarily headquartered in the United States, Japan, Europe and Taiwan. Our major competitors in power discretes include Advanced Power Electronics Corp., Diodes Incorporated, Fairchild Semiconductor International, Inc., Infineon Technologies AG, International Rectifier Corporation, MagnaChip Semiconductor Corporation, ON Semiconductors Corp., Renesas Technology Corp., STMicroelectronics N.V., Toshiba Corporation and Vishay Intertechnology, Inc. Our major competitors for our power ICs include Anpec Electronics Corporation, Global Mixed-mode Technology Inc., Monolithic Power Systems, Inc., Richtek Technology Corp., Semtech Corporation, Texas Instruments Inc. and Volterra Semiconductor Corporation.

Our ability to compete depends on a number of factors, including:


•	our success in identifying new and emerging markets, applications and technologies and developing power management solutions for these markets;


•	the performance and cost-effectiveness of our products relative to that of our competitors;


•	our ability to manufacture, package and deliver products in large volume on a timely basis at a competitive price;


•	our success in utilizing new and proprietary technologies to offer products and features previously not available in the marketplace;


•	our ability to recruit and retain analog semiconductor designers and application engineers; and


•	our ability to protect our intellectual property.

Some of our competitors have longer operating histories, more brand recognition, and significantly greater financial, technical, research and development, sales and marketing, manufacturing and other resources. However, we believe that we can compete effectively through our integrated and innovative technology platform and design capabilities, including our multi-chip approach to power IC products, strategic transnational business model, expanding portfolio of products, diversified and

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broad customer base, and excellent on-the-ground support and quick time to market for our products.

Intellectual property rights

Intellectual property is an important component of our business strategy, and we intend to continue to invest in the growth, maintenance and protection of our intellectual property portfolio. We own significant intellectual property in many aspects of our technology, including device physics and structure, wafer processes, circuit designs, packaging, modules and subassemblies. We have also entered into intellectual property licensing agreements with other companies, including Fairchild Semiconductor International, Inc., Giant Semiconductor Corporation and Matsushita Electronic Industrial Co. Ltd., to use selected third-party technology for the development of our products, although we do not believe our business is dependent to any significant degree on any individual third-party license.

While we focus our patent efforts in the United States, we file corresponding foreign patent applications in other jurisdictions, such as China and Taiwan, when filing is justified by cost and strategic importance. The patents are increasingly important to remain competitive in our industry, and a strong patent portfolio will facilitate the entry of our products into new markets. As of June 30, 2011, we had 176 patents issued in the United States, of which 39 were acquired, two were licensed and 135 were based on our research and development efforts, and these patents are set to expire between 2015 and 2031. We also had a total of 87 foreign patents, including 51 Chinese patents, 32 Taiwanese patents and 4 Korean patents. Except for the 2 Taiwanese patents that were purchased from a third party, all of our foreign patents were based on our research and development efforts. These foreign patents expire in the years between 2015 and 2029. In addition, as of June 30, 2011, we had a total of 544 patent applications, out of which 191 patents were pending in the United States, 160 patents were pending in China, 181 patents were pending in Taiwan and 12 patents were pending in other countries.

As our technologies are deployed in new applications, we may be subject to new potential infringement claims. Patent litigation, if and when instituted against us, could result in substantial costs and a diversion of our management's attention and resources. However, we are committed to vigorously defending and protecting our investment in our intellectual property. Therefore, the strength of our intellectual property program, including the breadth and depth of our portfolio, will be critical to our success in the new markets we intend to pursue.

In addition to patent protection, we also rely on a combination of trademark, copyright (including mask work protection), trade secret laws, contractual provisions and similar laws in other jurisdictions. We also enter into confidentiality and invention assignment agreements with our employees, consultants, suppliers, distributors and customers and seek to control access to, and distribution of, our proprietary information.

Environmental matters

The semiconductor production process, including the packaging process, generates gaseous chemical wastes, liquid wastes, waste water and other industrial wastes. We have installed various types of pollution control equipment for the treatment of gaseous chemical waste and liquid waste and equipment for the recycling of treated water in our packaging and testing facilities in China. Waste generated at our manufacturing facilities, including acid waste, alkaline waste, flammable waste, toxic waste, oxide waste and self-igniting waste, is collected and sorted for proper disposal. Our operations in China are subject to regulation and periodic monitoring by China's State Environmental Protection Bureau, as well as local environmental protection authorities, including those under the Shanghai Municipal Government, which may in some cases establish stricter standards than those imposed by the State Environmental Protection Bureau. We believe that we have been in material compliance with applicable environmental regulations and standards.

We have received all the applicable environmental assessment reports and approvals with respect to the construction of our manufacturing facilities in China. In addition, these facilities have implemented an ISO14001 environmental management system since June 12, 2009 and August 29, 2006. We also require our subcontractors, including foundries and assembly houses, to meet ISO14001 standards. We believe that we have adopted pollution control measures for the effective maintenance of environmental protection standards consistent with the requirements applicable to the semiconductor industry in China.

Our products sold in Europe are subject to RoHS in Electrical and Electronic Equipment, which requires that the products do not contain more than agreed levels of lead, cadmium, mercury, hexavalent chromium, polybrominated biphenyl and polybrominated diphenyl ether flame retardants. Our manufacturing facilities also obtained QC080000 certification, which is an IECQ Certificate of Conformity Hazardous Substance Process Management for European Directive 2002/95/EC requirements and a Certificate of Green Partner for Sony Green Partner Program. We avoid using these restricted materials to the extent possible when we design our products.

Employees

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As of June 30, 2011, we had 3,099 employees, of which 131 were located in the United States, 2,882 were located in China, and 86 were located in other parts of Asia. Of our employees, 2,590 were in operations and manufacturing, 201 were in research and development, 127 were in sales and marketing and 181 were in general and administrative. We consider our relations with our employees to be satisfactory.

Executive Officers

The following table lists the names, ages and positions of our executive officers as of July 31, 2011. There are no family relationships between any executive officer.



Name	Age	Position
Mike F. Chang, Ph.D.	66	Chairman of the Board and Chief Executive Officer
Yueh-Se Ho, Ph.D.	59	Director and Chief Operating Officer
Ephraim Kwok	57	Chief Financial Officer
Hamza Yilmaz, Ph.D.	56	Executive Vice President of Marketing and Product Line
Yifan Liang	47	Chief Accounting Officer

Mike F. Chang, Ph.D. , is the founder of our company and has served as our Chairman of the Board and Chief Executive Officer since the incorporation of our company. Dr. Chang has extensive experience in both technology development and business operations in the power semiconductor industry. Prior to establishing our company, Dr. Chang served as the Executive Vice President at Siliconix Incorporated, a subsidiary of Vishay Intertechnology Inc., a semiconductor company, or Siliconix, from 1998 to 2000. Dr. Chang also held various other positions at Siliconix from December 1987 to 1998. Earlier in his career, Dr. Chang held various positions at General Electric Company from 1974 to 1987. Dr. Chang received his B.S. in electrical engineering from National Cheng Kung University, Taiwan, and M.S. and Ph.D. in electrical engineering from the University of Missouri.

Yueh-Se Ho, Ph.D. , is a co-founder of our company and has served as our Chief Operating Officer since January 2006 and our director since March 2006. Dr. Ho has held various operations management positions in our company since our inception, including the Vice President of Worldwide Operations from 2003 to 2006 and the Vice President of Back End Operations from 2000 to 2003. Prior to co-founding our company, Dr. Ho served as the Director of Packaging Development and Foundry Transfer at Siliconix from 1998 to 2000. Dr. Ho received his B.S. in chemistry from Tamkang University, Taiwan, and Ph.D. in chemistry from the University of Pittsburgh.

Ephraim Kwok has served as our Chief Financial Officer since October 2005. Prior to joining our company, Mr. Kwok served as Chief Financial Officer for various public and private companies in the U.S. including WJ Communications, Inc., a semiconductor company, from 2004 to 2005, Summit Microelectronics, Inc., a semiconductor company, from 2003 to 2004, and Elantec Semiconductor, Inc., a semiconductor company, from 1998 to 2001. At Elantec, Mr. Kwok led a follow-on public offering and managed the company through significant growth in its operations and market capitalization. Mr. Kwok received his B.S. in physiology from the University of California at Davis and M.B.A. in finance from the University of California at Berkeley.

Hamza Yilmaz, Ph.D. , is currently serving the role as our Executive Vice President of Marketing and Product Lines. Dr. Yilmaz joined our company in January 2008 as Executive Vice President of Business Development and was promoted to Executive Vice President of Marketing and Sales in November 2009. Prior to joining our company, Dr. Yilmaz was the Senior Vice President of Semiconductor Technology and Product Development and Operations at Volterra Semiconductor, Inc. from 2007 to 2008. Dr. Yilmaz was the Senior Vice President of Product and Technology Development at Fairchild Semiconductor Corporation from 2004 to 2007. He served as the Vice President of Technology Development at GEM Services, a semiconductor assembly and testing company, from 2002 to 2004, and he also held various executive positions at Siliconix from 1988 to 2001, including Executive Vice President of Power Product Line. Dr. Yilmaz received his B.S. in electrical engineering from Yildiz Teknik University in Istanbul, Turkey, M.S. in electrical engineering from the University of Texas at Austin, and Ph.D. in electrical engineering from the University of Michigan.

Yifan Liang has served as our Chief Accounting Officer since October 2006. Mr. Liang joined our company in August 2004 as our Corporate Controller. Prior to joining us, Mr. Liang worked with PricewaterhouseCoopers LLP, or PwC, from 1995 to 2004 in various positions, including Audit Manager in PwC's San Jose office. Mr. Liang received his B.S. in management information system from the People's University of China and M.A. in finance and accounting from the University of Alabama. Mr. Liang is a certified public accountant of Ohio and a member of the American Institute of Certified Public Accountants.

Available Information

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Our filing documents and information with the Securities and Exchange Commission (the "SEC") are available free of charge electronically through our Internet website, www.aosmd.com. as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Additionally, these filings may be obtained by visiting the Public Reference Room of the SEC at 100 F Street, NE, Washington, DC 20549 or by calling the SEC at 1-800-SEC-0330, by sending an electronic message to the SEC at publicinfo@sec.gov or by sending a fax to the SEC at 1-202-777-1027. In addition, the SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically.

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Item 1A.	Risk Factors

Risks Related to Our Business

Our operating results may fluctuate from period to period due to many factors, which may make it difficult to predict our future performance.

Our periodic operating results may fluctuate as a result of a number of factors, many of which are beyond our control. These factors include, among others:


•	a deterioration in general demand for electronic products as a result of worldwide financial crises and associated macro-economic slowdowns;


•	a deterioration in business conditions at our distributors and /or end customers;


•	adverse general economic conditions in the countries where our products are sold or used;


•	the emergence and growth of markets for products we are currently developing;


•	our ability to successfully develop, introduce and sell new or enhanced products in a timely manner and the rate at which our new products replace declining orders for our older products;


•	the anticipation, announcement or introduction of new or enhanced products by us or our competitors;


•	the amount and timing of operating costs and capital expenditures, including expenses related to the maintenance and expansion of our business operations and infrastructure;


•	the announcement of significant acquisitions, disposition or partnership arrangements;


•	supply and demand dynamics and the resulting price pressure on the products we sell;


•	the unpredictable volume and timing of orders, deferrals, cancellations and reductions for our products, which may depend on factors such as our end customers' sales outlook, purchasing patterns and inventory adjustments based on general economic conditions or other factors;


•	changes in the selling prices of our products and in the relative mix in the unit shipments of our products, which have different average selling prices and profit margins;


•	changes in costs associated with manufacturing of our products, including pricing of wafer, raw materials and assembly services;


•	our concentration of sales in consumer applications, which subjects us to risks associated with unpredictable changes in consumer purchasing patterns and confidence; and


•	the adoption of new industry standards or changes in our regulatory environment;

In addition, in June 2011, we began to experience a general slow down of global economic activities in our core computing and consumer markets that have adversely affected our results of operations. Any one or a combination of the above factors and other risk factors described in this section may cause our operating results to fluctuate from period to period, making it difficult to predict our future performance. Therefore, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance.

Our revenue may fluctuate significantly from period to period due to ordering patterns from our distributors and seasonality.

Demand for our products from our end customers fluctuates depending on their sales outlooks and market and economic conditions. Accordingly, our distributors place purchase orders with us based on their assessment of end customer demand and their forecasts. Because these forecasts may not be accurate, channel inventory held at our distributors may fluctuate significantly due to the difference between the forecasts and actual demand. As a result, distributors adjust their purchase orders placed with us in response to changing channel inventory levels, as well as their assessment of the latest market demand trends. A significant decrease in our distributors' channel inventory in one period may lead to a significant rebuilding of channel inventory in subsequent periods, or vice versa, which may cause our quarterly revenue and operating results to fluctuate significantly.

In addition, because our power semiconductors are used in consumer electronics products, our revenue is subject to seasonality. Our sales seasonality is affected by a number of factors, including global and regional economic conditions, revenue generated from new products, changes in distributor ordering patterns in response to channel inventory adjustments and end customer demand for our products and fluctuations in consumer purchase patterns prior to major holiday seasons.

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However, in recent periods broad fluctuations in the semiconductor markets and the global economic conditions have had a more significant impact on our results than seasonality, and have made it difficult to assess the impact of seasonal factors on our business.

If we are unable to introduce or develop new and enhanced products that meet our customers' specifications in a timely manner, our operating results and competitive position would be harmed.

Our future success will depend on our ability to continue to introduce, develop and distribute new products and product enhancements that meet the specifications of our customers in a timely and cost-effective manner. Our customers are mainly ODMs and OEMs who are focused on reducing their number of vendors that they use. As a result, our ability to introduce new products rapidly and to maintain an extensive product portfolio is critical to developing and maintaining successful customer relationships. The development of our products is highly complex and our products must conform to the specifications or standards of our customers. We have, at times, experienced delays in completing the development and introduction of new products and product enhancements. Successful product development and customer acceptance of our products depend on a number of factors, including:


•	timely introduction and completion of new designs and timely qualification and certification of our products for use in our end customers' products;


•	commercial acceptance and volume production of the products into which our products will be incorporated;


•	market trends towards integration of discrete components into one device;


•	adequate availability of foundry, packaging and testing capacity;


•	achievement of high manufacturing yields;


•	availability, quality, price, performance, power use and size of our products relative to those of our competitors;


•	our customer service, application support capabilities and responsiveness;


•	successful development and expansion of our relationships with existing and potential customers; and


•	changes in technology, industry standards, end customer requirements or end user preferences and our ability to anticipate those changes.

We cannot guarantee that products which we recently developed or may develop in the future will meet customers' specifications on a timely basis or at all, and our failure to do so will adversely affect our business, results of operations, financial condition and prospects.

We may not win sufficient designs, or our design wins may not generate sufficient revenue for us to maintain or expand our business.

We invest significant resources to compete with other power semiconductor companies to obtain winning competitive bids for our products in selection processes, known as “design wins.” Our effort to obtain design wins may detract us from or delay completion of other important development projects, impair our relationships with existing end customers and negatively impact sales of products under development. In addition, we cannot assure you that these efforts would result in a design win, that our product would be incorporated into an end customer's initial product design, or that any such design win would lead to production orders and generate sufficient revenue. Furthermore, even after we have qualified our products with a customer and made sales, subsequent changes to our products, manufacturing processes or suppliers may require a new qualification process, which may result in delay and excess inventory. If we cannot achieve sufficient design wins in the future, or if we fail to generate production orders following design wins, our ability to grow our business will be harmed.

Our success depends upon the ability of our OEM end customers to successfully sell products incorporating our products.

The consumer end markets in which our products are used are highly competitive. Our OEM end customers may not successfully sell their products for a variety of reasons, including:


•	general economic conditions;


•	late introduction or lack of market acceptance of their products;


•	lack of competitive pricing;


•	shortage of component supplies;


•	excess inventory in the sales channels into which our end customers sell their products;

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•	changes in the supply chain; and


•	changes as a result of regulatory restrictions applicable to China-exported products.

Our success depends on the ability of our OEM end customers to sell products incorporating our products. In addition, we have expanded our business model to include more OEMs in our customer base. The failure of our OEM end customers to achieve or maintain commercial success for any reason could harm our business, results of operations, financial condition and prospects.

Defects and poor performance in our products could result in loss of customers, decreased revenue, unexpected expenses and loss of market share, and we may face warranty and product liability claims arising from defective products.

Our products are complex and must meet stringent quality requirements. Products as complex as ours may contain undetected errors or defects, especially when first introduced or when new versions are released. Errors, defects or poor performance can arise due to design flaws, defects in raw materials or components or manufacturing difficulties, which can affect both the quality and the yield of the product. It can also be potentially dangerous as defective power components, or improper use of our products by customers, may lead to power overloads, which could result in explosion or fire. As our products become more complex, we face higher risk of undetected defects, because our testing protocols may not be able to fully test the products under all possible operating conditions. In the past, we have experienced defects in our products due to certain errors in the packaging process, and these products were returned to us and subsequently sold at a discount. Any actual or perceived errors, defects or poor performance in our products could result in the replacement or recall of our products, shipment delays, rejection of our products, damage to our reputation, lost revenue, diversion of our engineering personnel from our product development efforts in order to address or remedy any defects and increases in customer service and support costs, all of which could have a material adverse effect on our business and operations.

Furthermore, defective, inefficient or poorly performing products, or improper use by customers of power components, may give rise to warranty and product liability claims against us that exceed any revenue or profit we receive from the affected products. We could incur significant costs and liabilities if we are sued and if damages are awarded against us. There is no guarantee that our insurance policies will be available or adequate to protect against such claims. Costs or payments we may make in connection with warranty and product liability claims or product recalls may adversely affect our financial condition and results of operations.

If we do not forecast demand for our products accurately, we may experience product shortages, delays in product shipment, excess product inventory, or difficulties in planning expenses, which will adversely affect our business and financial condition.

We manufacture our products according to our estimates of customer demand. This process requires us to make multiple forecasts and assumptions relating to the demand of our end customers and general market conditions. Because we sell most of our products to distributors, who in turn sell to our end customers, we have limited visibility as to end customer demand. Furthermore, we do not have long-term purchase commitments from our distributors or end customers, and our sales are generally made by purchase orders that may be cancelled, changed or deferred without notice to us or penalty. As a result, it is difficult to forecast future customer demand to plan our operations.

If we overestimate demand for our products, or if purchase orders are canceled or shipments delayed, we may have excess inventory that we cannot sell. Our provisions for inventory write-downs are estimates and are subject to adjustment based on events that may not be known at the time the provisions are made, and such adjustments could be material. We expect to record inventory write downs in the future in the normal course of our business. Conversely, if we underestimate demand, we may not have sufficient inventory to meet end-customer demand, and we may lose market share and damage relationships with our distributors and end customers and we may have to forego potential revenue opportunities. Obtaining additional supply in the face of product shortages may be costly or impossible, particularly in the short term, which could prevent us from fulfilling orders in a timely manner or at all.

In addition, we plan our operating expenses, including research and development expenses, hiring needs and inventory investments, in part on our estimates of customer demand and future revenue. If customer demand or revenue for a particular period is lower than we expect, we may not be able to proportionately reduce our fixed operating expenses for that period, which would harm our operating results for that period.

Upon acquisition of IDT wafer fabrication assets, we could be required to incur significant capital expenditures and fixed manufacturing costs, which may negatively impact our results of operations, and the operation of a fabrication facility may subject us to additional risks.

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Pursuant to our existing foundry service arrangement with IDT, we have obtained an option to purchase certain assets associated with a wafer fabrication facility from IDT for $26 million, and this option is exercisable by us from September 1, 2011 to November 15, 2011. On August 27, 2011, we announced that we intend to exercise this option prior to the November 15, 2011 deadline and expect the closing of the acquisition to occur by the end of January 2012.

If we acquire the IDT assets, we could be required to incur significant costs and expenses relating to integration and the operation of the wafer fabrication facility, including costs for additional personnel, raw materials, equipment and other overhead expenses. In addition, semiconductor manufacturing has historically required a constant upgrading of process technology to remain competitive, as new and enhanced semiconductor processes are developed which permit smaller, more efficient and more powerful semiconductor devices. If we maintain certain of our own manufacturing, which require significant investments in manufacturing technology and equipment, we may have to make substantial capital expenditures and install significant production capacity to support new technologies and increased production volume. In addition, we do not expect to observe an improvement in our results of operations due to the IDT acquisition until after the initial ramp-up period, which we anticipate to last for approximately two to three quarters following the closing of the acquisition. We also expect a temporary decline of our gross margin during the ramp-up period. We may not be able to realize a sufficient return for our investment on the IDT assets and failure to do so may have an adverse effect on our financial condition and results of operations.

In addition, the operation of the IDT facility may subject us to additional risks. In order to manage the capacity of the wafer fabrication facility efficiently, we must perform a forecast of long-term market demand and general economic conditions for our products. Because market conditions may vary significantly and unexpectedly, our forecast may change significantly at any time, and we may not be able to make timely adjustments to our fabrication capacity in response to these changes. During periods of continued decline in market demand, we may not be able to absorb the excess inventory and additional costs associated with operating the facility at higher capacity. Similarly, during periods of unexpected increase in customer demand, we may not be able to ramp up production quickly to meet these demands, which may lead to the loss of significant revenue opportunities.

Furthermore, the manufacturing processes of a fabrication facility are complex and subject to interruptions, and our experience in operating a wafer facility has been limited to active collaboration with third-party foundries. We may experience production difficulties, including lower manufacturing yields or products that do not meet our or our customers' specifications, and problems in ramping production and installing new equipment. These difficulties could result in delivery delays, quality problems and lost revenue opportunities. Any significant quality problems could also damage our reputation with our customers and could take focus away from the development of new and enhanced products. These could have a significant negative impact on our financial results.

We face intense competition and may not be able to compete effectively which could reduce our revenue and market share.

The power semiconductor industry is highly competitive and fragmented. If we do not compete successfully against current or potential competitors, our market share and revenue may decline. Our main competitors are primarily headquartered in the United States, Japan, Taiwan and Europe. Our major competitors for our power discretes include Advanced Power Electronics Corp., Diodes Incorporated, Fairchild Semiconductor International, Inc., Infineon Technologies AG, International Rectifier Corporation, MagnaChip Semiconductor Corporation, ON Semiconductor Corporation, Renesas Technology Corp., STMicroelectronics N.V., Toshiba Corporation and Vishay Intertechnology, Inc. Our major competitors for our power ICs include Anpec Electronics Corporation, Global Mixed-mode Technology Inc., Monolithic Power Systems, Inc., Richtek Technology Corp., Semtech Corporation, Texas Instruments Inc. and Volterra Semiconductor Corporation. We expect to face competition in the future from our competitors, other manufacturers, designers of semiconductors and start-up semiconductor design companies. Many of our competitors have competitive advantages over us, including:


•	significantly greater financial, technical, research and development, sales and marketing and other resources, enabling them to invest substantially more resources than us to respond to the adoption of new or emerging technologies or changes in customer requirements;


•	greater brand recognition and longer operating histories;


•	larger customer bases and longer, more established relationships with distributors or existing or potential end customers, which may provide them with greater reliability and information regarding future trends and requirements that may not be available to us;


•	the ability to provide greater incentives to end customers through rebates, and marketing development funds or similar programs;


•	more product lines, enabling them to bundle their products to offer a broader product portfolio or to integrate power management functionality into other products that we do not sell; and

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•	captive manufacturing facilities, providing them with guaranteed access to manufacturing facilities in times of global semiconductor shortages.

If we are unable to compete effectively for any of the foregoing or other reasons, our business, results of operations, financial condition and prospects will be harmed.

We depend on HHNEC and other outside semiconductor foundries to manufacture our products and implement our fabrication processes, and any failure to maintain sufficient foundry capacity and control the cost of production could significantly delay our ability to ship our products, damage our relationships with customers, reduce our sales and increase expenses.

We currently do not own or operate fabrication facilities and instead outsource fabrication of our products to independent foundries. Although we use several independent foundries, we primarily rely on HHNEC to manufacture the majority of our products. HHNEC manufactured 68.7%, 71.8% and 61.8% of the wafers used in our products for the fiscal years ended June 30, 2011, 2010 and 2009, respectively.

We place our purchase orders with foundries based on sales forecasts for our products. If any third-party foundry does not provide competitive pricing or is not able to meet our required capacity for any reason, or if our business relationship with HHNEC deteriorates, we may not be able to obtain the required capacity to manufacture our products timely or efficiently. In June 2010, HHNEC increased the price of its foundry services and there can be no assurance that HHNEC will not impose further price increases in its current pricing structure in the future, or that we will be able to implement measures successfully to offset or mitigate the effect of the price increase and failure to do so could have a material adverse effect on our results of operations. If we cannot maintain sufficient capacity or control pricing with our existing foundries, we would have to seek alternative foundries, which may not be available on commercially reasonable terms, or at all. In addition, the process for qualifying a new foundry is time consuming, difficult and may not be successful, particularly if we cannot integrate our proprietary process technology with the process used by the new foundry. Using a foundry with which we have no established relationship could expose us to potentially unfavorable pricing, unsatisfactory quality or insufficient capacity allocation.

In addition, we rely on third-party foundries to effectively implement our proprietary technology and processes and also require their cooperation in developing new fabrication processes. Any failure to do so will severely impair our ability to introduce new products. In order to maintain our profit margins and to meet our customer demand, we need to achieve acceptable production yields and timely delivery of silicon wafers. As is common in the semiconductor industry, we have experienced, and may experience from time to time, difficulties achieving acceptable production yields and timely delivery from third-party foundry vendors. Minute impurities in a silicon wafer can cause a substantial number of wafers to be rejected or cause numerous dice on a wafer to be defective. Low yields often occur during the production of new products, the migration of processes to smaller geometries or the installation and start up of new process technologies.

We face a number of other significant risks associated with outsourcing fabrication, including:


•	limited control over delivery schedules, quality assurance and control and production costs;


•	discretion of foundries to reduce deliveries to us on short notice, allocate capacity to other customers that may be larger or have long-term customer or preferential arrangements with foundries that we use;


•	unavailability of, or potential delays in obtaining access to, key process technologies;


•	limited warranties on wafers or products supplied to us;


•	damage to equipment and facilities, power outages, equipment or materials shortages that could limit manufacturing yields and capacity at the foundries;


•	potential unauthorized disclosure or misappropriation of intellectual property, including use of our technology by the foundries to make products for our competitors;


•	financial difficulties and insolvency of foundries; and


•	acquisition of foundries by third parties.

Any of the foregoing risks could delay shipment of our products, result in higher expenses and reduced revenue, damage our relationships with customers and otherwise adversely affect our business and operating results.

Our investment in two in-house packaging and testing facilities and our operation of those facilities are subject to risks that could adversely affect our business and operating results.

We have established an in-house packaging and testing facility, Nissi, and in December 2010, we acquired 100%

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ownership of APM. Nissi and APM, collectively, handle substantially all of our packaging and testing requirements. The operation of a high-volume packaging and testing facility and implementation of our advanced packaging technology are complex and demand a high degree of precision and may require modification to improve yields and product performance. We have committed substantial resources to ensure that our packaging and testing facilities operates efficiently and successfully, including the acquisition of equipment and raw materials, and training and management of a large number of technical personnel and employees. We have invested all of $53.3 million of the net proceeds received by us from our initial public offering, or IPO in our in-house packaging and testing facilities, including $17.0 million spent on the acquisition of APM. We may not be able to achieve adequate returns on our investment in our in-house packaging and testing facilities, and if we are unable to utilize our in-house facilities at a desirable level of production, our gross margin and results of operations may be adversely affected. In addition, the operation of our packaging and testing facilities is subject to a number of risks, including the following:


•	unavailability of equipment, whether new or previously owned, at acceptable terms and prices;


•	facility equipment failure, power outages or other disruptions;


•	shortage of raw materials, including packaging substrates, copper, gold and molding compound;


•	failure to maintain quality assurance and remedy defects and impurities;


•	changes in the packaging requirements of customers; and


•	our limited experience in operating a high-volume packaging and testing facility.

Any of the foregoing risks could adversely affect our capacity to package and test our products, which could delay shipment of our products, result in higher expenses, reduce revenue, damage our relationships with customers and otherwise adversely affect our business, results of operations, financial condition and prospects.

We have made and may continue to make strategic acquisitions of other companies or businesses and these acquisitions introduce significant risks and uncertainties, including risks related to integrating the acquired businesses, incurring additional debt, assuming contingent liabilities or diluting our existing shareholders.

In order to position ourselves to take advantage of growth opportunities, we have made, and may continue to make, strategic acquisitions, mergers and alliances that involve significant risks and uncertainties. Successful acquisitions and alliances in the semiconductor industry are difficult to accomplish because they require, among other things, efficient integration and aligning of product offerings and manufacturing operations and coordination of sales and marketing and research and development efforts. The difficulties of integration and alignment may be increased by the necessity of coordinating geographically separated organizations, the complexity of the technologies being integrated and aligned and the necessity of integrating personnel with disparate business backgrounds and combining different corporate cultures.

The integration of newly acquired businesses will also require a significant amount of time and attention from management. For example, we recently announced the intention to acquire certain assets associated with the IDT wafer fabrication facility located in Hillsboro, Oregon. The integration of the IDT facility will require significant internal and external coordination. The diversion of management attention away from ongoing operations and key research and development, marketing or sales efforts could adversely affect ongoing operations and business relationships. Moreover, even if we were able to fully integrate the business operations and other assets of the IDT wafer fabrication facility successfully, there can be no assurance that this integration will result in the realization of the full benefits of synergies, cost savings, innovation and operational efficiencies that may be possible from this integration or that these benefits will be achieved within a reasonable period of time. Delays in integrating the IDT facility, which could be caused by factors outside of our control, could adversely affect the intended benefits of our business, financial results, financial condition and stock price.

In addition, we may also issue equity securities to pay for future acquisitions or alliances, which could be dilutive to existing shareholders. We may also incur debt or assume contingent liabilities in connection with acquisitions and alliances, which could impose restrictions on our business operations and harm our operating results.

If we are unable to obtain raw materials in a timely manner or if the price of raw materials increases significantly, production time and product costs could increase, which may adversely affect our business.

Our fabrication and packaging processes depend on raw materials such as silicon wafers, gold, copper, molding compound, petroleum and plastic materials and various chemicals and gases. From time to time, suppliers may extend lead times, limit supplies or increase prices due to capacity constraints or other factors. If the prices of these raw materials rise significantly, we may be unable to pass on the increased cost to our customers. Our results of operations could be adversely affected if we are unable to obtain adequate supplies of raw materials in a timely manner or at reasonable cost. In addition,

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from time to time, we may need to reject raw materials that do not meet our specifications, resulting in potential delays or declines in output. Furthermore, problems with our raw materials may give rise to compatibility or performance issues in our products, which could lead to an increase in customer returns or product warranty claims. Errors or defects may arise from raw materials supplied by third parties that are beyond our detection or control, which could lead to additional customer returns or product warranty claims that may adversely affect our business and results of operations.

Our operations may be delayed or interrupted and our business may be adversely affected as a result of our efforts to comply with environmental regulations applicable to our in-house packaging and testing facility.

Our in-house packaging and testing facilities are subject to a variety of environmental regulations relating to the use, discharge and disposal of toxic or otherwise hazardous materials. See “Item 1. Business- Environmental matters.” Compliance with environmental regulations could require us to acquire expensive pollution control equipment or to incur other substantial expenses or investigate and remediate contamination at our current facilities. Any failure, or any claim that we have failed, to comply with these regulations could cause delays in our production and capacity expansion and affect our public image, either of which could harm our business. In addition, any failure to comply with these regulations could subject us to substantial fines or other liabilities, result in the suspension of our operating permit, or require us to terminate or adversely modify our in-house packaging and testing operations.

Our reliance on distributors to sell a substantial portion of our products subjects us to a number of risks.

We sell a substantial portion of our products to distributors, who in turn sell to our end customers. Our distributors typically offer power semiconductor products from several different companies, including our direct competitors. The distributors assume collection risk and provide logistical services to end customers, including stocking our products. Two distributors, WPG and Promate, collectively accounted for 67.3%, 74.1% and 77.8% of our revenue for the fiscal years ended June 30, 2011, 2010 and 2009, respectively. Our agreement with Frontek Technology Corporation, a member of WPG, was renewed in July 2010 with a one-year term and will be automatically renewed for each one-year period continuously unless terminated earlier pursuant to the provisions in the agreement. Our agreement with Promate was renewed in July 2010 with a five-year term and thereafter will be automatically renewed for each one-year period continuously unless terminated earlier pursuant to the provisions in the agreement. We believe that our success will continue to depend upon these distributors. Our reliance on distributors subjects us to a number of risks, including:


•	write-downs in inventories associated with stock rotation rights and increases in provisions for price adjustments granted to certain distributors;


•	potential reduction or discontinuation of sales of our products by distributors;


•	failure to devote resources necessary to sell our products at the prices, in the volumes and within the time frames that we expect;


•	focusing their sales efforts on products of our competitors;


•	dependence upon the continued viability and financial resources of these distributors, some of which are small organizations with limited working capital and all of which depend on general economic conditions and conditions within the semiconductor industry;


•	dependence on the timeliness and accuracy of shipment forecasts and resale reports from our distributors;


•	management of relationships with distributors, which can deteriorate as a result of conflicts with efforts to sell directly to our end customers; and


•	termination of our agreements with distributors which are generally terminable by either party on short notice.

If any significant distributor becomes unable or unwilling to promote and sell our products, or if we are not able to renew our contracts with the distributors on acceptable terms, we may not be able to find a replacement distributor on reasonable terms or at all and our business could be harmed.

We may not be able to accurately estimate provisions at fiscal period end for price adjustment and stock rotation rights under our agreements with distributors, and our failure to do so may impact our operating results.

We sell a majority of our products to distributors under arrangements allowing price adjustments and returns under stock rotation programs, subject to certain limitations. As a result, we are required to estimate allowances for price adjustments and stock rotation for our products as inventory at distributors at each reporting period end. Our ability to reliably estimate these allowances enables us to recognize revenue upon delivery of goods to distributors instead of upon resale of goods by distributors to end customers.

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We estimate the allowance for price adjustment based on factors such as distributor inventory levels, pre-approved future distributor selling prices, distributor margins and demand for our products. Our estimated allowances for price adjustments, which we offset against accounts receivable from distributors, were $19.2 million, $8.5 million and $11.0 million at June 30, 2011, 2010 and 2009, respectively.

Our accruals for stock rotation are estimated based on historical returns and individual distributor agreement, and stock rotation rights, which are recorded as accrued liabilities on our consolidated balance sheets, are contractually capped based on the terms of each individual distributor agreement. Our estimated liabilities for stock rotation at June 30, 2011, 2010 and 2009 were $1.9 million, $0.5 million and $1.1 million , respectively.

Our estimates for these allowances and accruals may be inaccurate. If we subsequently determine that any allowance and accrual based on our estimates is insufficient, we may be required to increase the size of our allowances and accrual in future periods, which would adversely affect our results of operations and financial condition.

We depend on the continuing efforts of our senior management team and other key personnel, and if we lose a member of our senior management or are unable to successfully retain, recruit and train key personnel, our ability to develop and market our products could be harmed.

Our success depends upon the continuing services of members of our senior management team and various engineering and other technical personnel, including Dr. Mike F. Chang, our founder, Chief Executive Officer and Chairman of the Board. In particular, our engineers and other technical personnel are critical to our future technological and product innovations. Our industry is characterized by high demand and intense competition for talent and the pool of qualified candidates is limited. We have entered into employment agreements with certain senior executives, but we do not have employment agreements with most of our employees. Many of these employees could leave our company with little or no prior notice and would be free to work for a competitor. If one or more of our senior executives or other key personnel are unable or unwilling to continue in their present positions, we may not be able to replace them easily or at all and other senior management may be required to divert attention from other aspects of our business. In addition, we do not have “key person” life insurance policies covering any member of our management team or other key personnel. The loss of any of these individuals or our inability to attract or retain qualified personnel, including engineers and others, could adversely affect our product introductions, overall business growth prospects, results of operations and financial condition.

If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.

Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may decline to issue an opinion as to the effectiveness of our internal control over financial reporting, or may issue a report that is qualified or adverse. During the course of the initial evaluation of internal control over financial reporting, we or our independent registered public accounting firm may identify control deficiencies that we may not be able to remediate prior to the date of our first assessment of internal control over financial reporting. Our failure to achieve and maintain effective internal control over financial reporting could result in the loss of investor confidence in the reliability of our financial statements or prevent fraud, which in turn could harm our business and negatively impact the trading price of our shares.

Failure to protect our patents and our other proprietary information could harm our business and competitive position.

Our success depends, in part, on our ability to protect our intellectual property. We rely on a combination of patent, copyright (including mask work protection), trademark and trade secret laws, as well as nondisclosure agreements, license agreements and other methods to protect our intellectual property rights, which may not be sufficient to protect our intellectual property. As of June 30, 2011, we owned 176 issued U.S. patents expiring between 2015 and 2031 and had 191 pending patent applications with the United States Patent and Trademark Office. In addition, we own additional patents and have filed patent applications in jurisdictions outside of the U.S.

Our patents and patent applications may not provide meaningful protection from our competitors, and there is no guarantee that patents will be issued from our patent applications. The status of any patent or patent application involves complex legal and factual determinations and the breadth of a claim is uncertain. In addition, our efforts to protect our intellectual property may not succeed due to difficulties and risks associated with:


•	policing any unauthorized use of or misappropriation of our intellectual property, which is often difficult and costly and could enable third parties to benefit from our technologies without paying us;


•	others independently developing similar proprietary information and techniques, gaining authorized or unauthorized

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access to our intellectual property rights, disclosing such technology or designing around our patents;


•	the possibility that any patent or registered trademark owned by us may not be enforceable or may be invalidated, circumvented or otherwise challenged in one or more countries and the rights granted thereunder may not provide competitive advantages to us;


•	uncertainty as to whether patents will be issued from any of our pending or future patent applications with the scope of the claims sought by us, if at all; and


•	intellectual property laws and confidentiality protections, which may not adequately protect our intellectual property rights, including, for example, in China where enforcement of China intellectual property-related laws has historically been ineffective, primarily because of difficulties in enforcement and low damage awards.

We also rely on customary contractual protections with our customers, suppliers, distributors, employees and consultants, and we implement security measures to protect our trade secrets. We cannot assure you that these contractual protections and security measures will not be breached, that we will have adequate remedies for any such breach or that our suppliers, employees or consultants will not assert rights to intellectual property arising out of such contracts.

In addition, we have a number of third-party patent and intellectual property license agreements, one of which requires us to make ongoing royalty payments. In the future, we may need to obtain additional licenses, renew existing license agreements or otherwise replace existing technology. We are unable to predict whether these license agreements can be obtained or renewed or the technology can be replaced on acceptable terms, or at all.

Intellectual property disputes could result in lengthy and costly arbitration, litigation or licensing expenses or prevent us from selling our products.

As is typical in the semiconductor industry, we or our customers may receive claims of infringement from time to time or otherwise become aware of potentially relevant patents or other intellectual property rights held by other parties that may cover some of our technology, products and services or those of our end customers. The semiconductor industry is characterized by vigorous protection and pursuit of intellectual property rights which has resulted in protracted and expensive arbitration and litigation for many companies. Patent litigation has increased in recent years owing to increased assertions made by intellectual property licensing entities and increasing competition and overlap of product functionality in our markets.

Any litigation or arbitration regarding patents or other intellectual property could be costly and time consuming and could divert our management and key personnel from our business operations. We have in the past and may from time to time in the future become involved in litigation that requires our management to commit significant resources and time. For example, in 2007, we commenced a patent litigation with Fairchild Semiconductor International, Inc., or Fairchild, in which we filed infringement claims against Fairchild, and Fairchild responded by filing infringement counterclaims against us. The litigation was vigorously prosecuted by both parties and diverted the efforts and attention of our management and technical personnel before it was settled in October 2008. The settlement included a cross-license agreement between the parties. In December 2006, we initiated an arbitration proceeding against Siliconix Incorporated, or Siliconix, to recover certain quarterly royalty payments under our agreement with Siliconix, and Siliconix responded by filing a counterclaim against us for royalty payments under the agreement. The arbitration proceeding was settled in 2008. We incurred a total of $8.2 million of legal costs relating to these two intellectual property disputes. In addition, we recently launched several key product families and technologies to enable high efficiency power conversion solutions. Our entry into the commercial markets for high-voltage power semiconductors may subject us to additional risk of disputes or litigation relating to these products.

Because of the complexity of the technology involved and the uncertainty of litigation generally, any intellectual property arbitration or litigation involves significant risks. Any claim of intellectual property infringement against us may require us to:


•	pay substantial damages to the party claiming infringement;


•	refrain from further development or sale of our products;


•	attempt to develop non-infringing technology, which may be expensive and time consuming, if possible at all;


•	seek to enter into costly royalty or license agreements that might not be available on commercially reasonable terms or at all;


•	cross-license our technology with a competitor to resolve an infringement claim, which could weaken our ability to compete with that competitor; and


•	indemnify our distributors, end customers, licensees and others from the costs of and damages of infringement claims by our distributors, end customers, licensees and others, which could result in substantial expenses for us and damage our business relationships with them.

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Any intellectual property claim or litigation could harm our business, results of operations, financial condition and prospects.

Global or regional economic, political and social conditions could adversely affect our business and operating results.

External factors such as potential terrorist attacks, acts of war, financial crises, such as the global or regional economic recession, or geopolitical and social turmoil in those parts of the world that serve as markets for our products could have significant adverse effect on our business and operating results in ways that cannot presently be predicted. In the past, global economic downturn and financial crisis has negatively impacted our business, resulting in a decrease in our revenue in the fiscal year ended June 30, 2009 to $185.1 million from $273.9 million in the fiscal year ended June 30, 2008. Any future economic downturn or recession in the global economy in general and, in particular, on the economies in China, Taiwan and other countries where we market and sell our products, will have an adverse effect on our results of operations. In addition, in June 2011, we began to experience a general slow down of global economic activities in our core computing and consumer markets that have adversely affected our results of operations. It is uncertain how long this trend will continue and how much of an adverse impact it will have on our results of operations.

Our business operations could be significantly harmed by natural disasters or global epidemics.

We have research and development facilities located in Taiwan and the Silicon Valley in Northern California. Historically, these regions have been vulnerable to natural disasters and other risks, such as earthquakes, fires and floods, which may disrupt the local economy and pose physical risks to our property. We also have sales offices located in Taiwan and Japan where similar natural disasters and other risks may disrupt the local economy and pose physical risks to our operations. We are not currently covered by insurance against business disruption caused by earthquakes. In addition, we currently do not have redundant, multiple site capacity in the event of a natural disaster or other catastrophic event. In the event of such an occurrence, our business would suffer.

Our business could be adversely affected by epidemics or outbreaks such as avian flu or H1N1 flu, also known as swine flu. An outbreak of avian flu or H1N1 flu in the human population, or another similar health crisis, could adversely affect the economies and financial markets of many countries, particularly in Asia. Moreover, any related disruptions to transportation or the free movement of persons could hamper our operations and force us to close our offices temporarily.

The occurrence of any of the foregoing or other natural or man-made disasters could cause damage or disruption to us, our employees, operations, distribution channels, markets and customers, which could result in significant delays in deliveries or substantial shortages of our products and adversely affect our business results of operations, financial condition or prospects.

Our insurance may not cover all losses, including losses resulting from business disruption or product liability claims.

We have limited product liability, business disruption or other business insurance coverage for our operations. In addition, we do not have any business insurance coverage for our operations to cover losses that may be caused by litigation or natural disasters. Any occurrence of uncovered loss could harm our business, results of operations, financial condition and prospects.

Our international operations subject our company to risks not faced by companies without international operations.

We have adopted a transnational business model under which we maintain significant operations and facilities through our subsidiaries located in the U.S., China, Taiwan and Hong Kong. Our main research and development center is located in Silicon Valley, and our manufacturing and supply chain is located in China. We also have sales offices and customers throughout Asia, the U.S. and elsewhere in the world. The following are some of the risks inherent in doing business on an international level that may not be applicable to domestic companies:


•	economic and political instability;


•	transportation and communication delays;


•	coordination of operations through multiple jurisdictions and time zones;


•	fluctuations in currency exchange rates;


•	trade restrictions, changes in laws and regulations relating to, amongst other things, import and export tariffs, taxation, environmental regulations, land use rights and property; and


•	the laws of, including tax laws, and the policies of the U.S. toward, countries in which we operate.

We are subject to the risk of increased income taxes and changes in existing tax rules.

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We conduct our business in multiple jurisdictions, including Hong Kong, Macau, the U.S., China, Taiwan, Korea, Japan and Singapore. Any of these jurisdictions may assert that we have unpaid taxes. Our effective tax rates have fluctuated significantly in recent years. Our effective tax rate was 6.5%, 3.8% and 17.6% for the fiscal years ended June 30, 2011, 2010 and 2009, respectively. Any tax rate changes in the tax jurisdictions in which we operate could result in adjustments to our deferred tax assets, if applicable, which would affect our effective tax rate and results of operations. We base our tax position upon the anticipated nature and conduct of our business and upon our understanding of the tax laws of the various countries in which we have assets or conduct activities. However, our tax position is subject to review and possible challenge by tax authorities and to possible changes in law, which may have a retroactive effect. In particular, various proposals over the years have been made to change certain U.S. tax laws relating to foreign entities with U.S. connections. In addition, the U.S. government has proposed various other changes to the U.S. international tax system, certain of which could adversely impact foreign-based multinational corporate groups, and increased enforcement of U.S. international tax laws. It is possible that these or other changes in the U.S. tax laws could significantly increase our U.S. income tax liability in the future.

In addition, our subsidiaries provide products and services to, and may from time to time undertake certain significant transactions with, us and other subsidiaries in different jurisdictions. We have adopted transfer pricing arrangements for transactions among our subsidiaries. Related party transactions are generally subject to close review by tax authorities, including requirements that transactions be priced at arm's length and be adequately documented. We have not been subject to any tax audit or challenge by any tax authorities with respect to any tax position taken during the past three fiscal years. If any of these tax authorities were successful in challenging our transfer pricing policies or other tax judgments, our income tax expense may be adversely affected and we could also be subject to interest and penalty charges which may harm our business, financial condition and operating results.

The imposition of U.S. corporate income tax on our Bermuda parent and non-U.S. subsidiaries could adversely affect our results of operations.

We believe that our Bermuda parent and non-U.S. subsidiaries each operate in a manner that they would not be subject to U.S. corporate income tax because they are not engaged in a trade or business in the United States. Nevertheless, there is a risk that the U.S. Internal Revenue Service may successfully assert that our Bermuda parent and non-U.S. subsidiaries are engaged in a trade or business in the United States. If our Bermuda parent and non-U.S. subsidiaries were characterized as being so engaged, we would be subject to U.S. tax at regular corporate rates on our income that is effectively connected with U.S. trade or business, plus an additional 30% “branch profits” tax on the dividend equivalent amount, which is generally effectively connected income with certain adjustments, deemed withdrawn from the United States. Any such tax could materially and adversely affect our results of operations.

We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences for U.S. holders.

Based on the current and anticipated valuation of our assets and the composition of our income and assets, we do not expect to be considered a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for the foreseeable future. However, we must make a separate determination for each taxable year as to whether we are a PFIC after the close of each taxable year and we cannot assure you that we will not be a PFIC for our 2011 taxable year or any future taxable year. Under current law, a non-U.S. corporation will be considered a PFIC for any taxable year if either (1) at least 75% of its gross income is passive income or (2) at least 50% of the value of its assets, generally based on an average of the quarterly values of the assets during a taxable year, is attributable to assets that produce or are held for the production of passive income. PFIC status depends on the composition of our assets and income and the value of our assets, including, among others, a pro rata portion of the income and assets of each subsidiary in which we own, directly or indirectly, at least 25% by value of the subsidiary's equity interests, from time to time. Because we currently hold and expect to continue to hold a substantial amount of cash or cash equivalents, and because the calculation of the value of our assets may be based in part on the value of our common shares, which may fluctuate considerably given that market prices of technology companies historically often have been volatile, we may be a PFIC for any taxable year. If we were treated as a PFIC for any taxable year during which a U.S. holder held common shares, certain adverse U.S. federal income tax consequences could apply for such U.S. holder.

Risks Related to Our Industry

The average selling prices of products in our markets have historically decreased rapidly and will likely do so in the future, which could harm our revenue and gross margins.

As is typical in the semiconductor industry, the average selling price of a particular product has historically declined

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significantly over the life of the product. In the past, we have reduced the average selling prices of our products in anticipation of future competitive pricing pressures, new product introductions by us or our competitors and other factors. We expect that we will have to similarly reduce prices in the future for older generations of products. Reductions in our average selling prices to one customer could also impact our average selling prices to all customers. A decline in average selling prices would harm our gross margins for a particular product. If not offset by sales of other products with higher gross margins, our overall gross margins may be adversely affected. Our business, results of operations, financial condition and prospects will suffer if we are unable to offset any reductions in our average selling prices by increasing our sales volumes, reducing our costs and developing new or enhanced products on a timely basis with higher selling prices or gross margins.

We may be adversely affected by the cyclicality of the semiconductor industry.

Our industry is highly cyclical and is characterized by constant and rapid technological change, product obsolescence and price erosion, evolving standards, uncertain product life cycles and wide fluctuations in product supply and demand. The industry has, from time to time, experienced significant and sometimes prolonged, downturns, and often connected with or in anticipation of, maturing product cycles and declines in general economic conditions. These downturns have been characterized by diminished product demand, production overcapacity, high inventory levels and accelerated erosion of average selling prices. Any future downturns may reduce our revenue and result in us having excess inventory. By contrast, any upturn in the semiconductor industry could result in increased competition for access to limited third-party foundry and packaging and testing capacity, which could prevent us from benefiting from such an upturn or reduce our profit margins.

Changes in industry standards, technology, customer requirements and government regulation could limit our ability to sell our products.

The semiconductor industry is characterized by changing demand for new and advanced functions, long design and sales cycles, rapid product obsolescence and price erosion, intense competition, evolving industry standards and wide fluctuations in product supply and demand. Changes in industry standards, or the development of new industry standards, or, when applicable, government approval or disapproval of industry standards may make our products obsolete or negate the cost advantages we believe we have in our products. We may be required to invest significant effort and to incur significant expense to redesign our products in order to address relevant standards, technological developments, customer requirements or regulations but may not have the financial resources to respond to these changes effectively or in a timely manner. Any inability to meet these standards, regulations and requirements could harm our business, results of operations, financial condition and prospects.

Risks Related to Doing Business in China

China's economic, political and social conditions, as well as government policies, could affect our business and growth.

Our financial results have been, and are expected to continue to be, affected by the economy in China. A slowdown of economic growth in China or other adverse developments could harm our business, results of operations, financial condition and prospects.

The China economy differs from the economies of most developed countries in many respects, including:


•	higher level of government involvement;


•	early stage of development of a market-oriented economy;


•	rapid growth rate;


•	higher level of control over foreign currency exchange; and


•	less efficient allocation of resources.

The Chinese economy has been transitioning from a planned economy to a more market-oriented economy. Although in recent years the China government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of corporate governance in business enterprises, the China government continues to retain significant control over the business and productive assets in China. Any changes in China's government policy or China's political, economic and social conditions, or in relevant laws and regulations, may adversely affect our current or future business, results of operation or financial condition. These changes in government policy may be implemented through various means, including changes in laws and regulations, implementation of anti-inflationary measures, changes in the tax rate or taxation system and the imposition of additional restrictions on currency conversion and imports. Furthermore, given China's largely export-driven economy, any changes in the economies of the China's principal trading partners and other export-oriented nations may adversely affect our business, results of operations,

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financial condition and prospects.

Our ability to successfully expand our business operations in China depends on a number of factors, including macroeconomic and other market conditions, and credit availability from lending institutions. From late 2003 to mid-2008, the China government implemented a number of measures that had the effect of slowing the growth of credit, which in turn may have slowed the growth of the Chinese economy. In response to the recent global and Chinese economic recession, the China government has promulgated several measures aimed at expanding credit and stimulating economic growth. We cannot assure you that the various macroeconomic measures, monetary policies and economic stimulus package adopted by the China government to guide economic growth will be effective in maintaining or sustaining the growth rate of the Chinese economy. If measures adopted by the China government fail to achieve further growth in the Chinese economy, it may adversely affect our growth, business strategies and operating results.

Changes in China's laws, legal protections or government policies on foreign investment in the China may harm our business.

Our business and corporate transactions are subject to laws and regulations applicable to foreign investment in China as well as laws and regulations applicable to foreign-invested enterprises. These laws and regulations frequently change, and their interpretation and enforcement involves uncertainties that could limit the legal protections available to us. Regulations and rules on foreign investments in China impose restrictions on the means that a foreign investor like us may apply to facilitate corporate transactions we may undertake. In addition, the Chinese legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all, that may have a retroactive effect. As a result we may not be aware of our violation of these policies and rules until some time after the violation. If any of our past operations are deemed to be non-compliant with Chinese law, we may be subject to penalties and our business and operations may be adversely affected. For instance, under the catalogue for the Guidance of Foreign Investment Industries, some industries are categorized as sectors which are encouraged, restricted or prohibited for foreign investment. As the catalogue for the Guidance of Foreign Investment Industries is updated every few years, there can be no assurance that the China government will not change its policies in a manner that would render part or all of our business to fall within the restricted or prohibited categories. If we cannot obtain approval from relevant authorities to engage in businesses which become prohibited or restricted for foreign investors, we may be forced to sell or restructure a business which has become restricted or prohibited for foreign investment. Furthermore, the China government has broad discretion in dealing with violations of laws and regulations, including levying fines, revoking business and other licenses and requiring actions necessary for compliance. In particular, licenses and permits issued or granted to us by relevant governmental bodies may be revoked at a later time by higher regulatory bodies. If we are forced to adjust our corporate structure or business as a result of changes in government policy on foreign investment or changes in the interpretation and application of existing or new laws, our business, financial condition, results of operations and prospects may be harmed. Moreover, uncertainties in the Chinese legal system may impede our ability to enforce contracts with our business partners, customers and suppliers, or otherwise pursue claims in litigation to recover damages or loss of property, which could adversely affect our business and operations.

Limitations on our ability to transfer funds to our China subsidiaries could adversely affect our ability to expand our operations, make investments that could benefit our businesses and otherwise fund and conduct our business.

The transfer of funds from us to our China subsidiaries, either as a shareholder loan or as an increase in registered capital, is subject to registration with or approval by the China's governmental authorities, including the State Administration of Foreign Exchange, or SAFE, or the relevant examination and approval authority. Our subsidiaries may also experience difficulties in converting our capital contributions made in foreign currencies into RMB due to changes in the China's foreign exchange control policies. Therefore, it may be difficult to change capital expenditure plans once the relevant funds have been remitted from us to our China subsidiaries. These limitations and the difficulties our China subsidiaries may experience on the free flow of funds between us and our China subsidiaries could restrict our ability to act in response to changing market situations in a timely manner.

Controversies affecting China's trade with the United States could harm our business.

While China has been granted permanent most favored nation trade status in the U.S. through its entry into the World Trade Organization, controversies between the United States and China may arise that threaten the trading relationship between the two countries. At various times during recent years, the United States and China have had disagreements over political and economic issues. In addition, disagreements between the United States and China with respect to their political, military or economic policies toward Taiwan may contribute to further controversies. These controversies and trade frictions could have a material adverse effect on our business by, among other things, making it more difficult for us to coordinate our operations between the United States and China or causing a reduction in the demand for our products by customers in the United States

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or China.

Relations between Taiwan and China could negatively affect our business, financial condition and operating results and, therefore, the market value of our common shares.

Taiwan has a unique international political status. China does not recognize the sovereignty of Taiwan. Although significant economic and cultural relations have been established during recent years between Taiwan and China, relations have often been strained. A substantial number of our key customers and some of our essential sales and engineering personnel are located in Taiwan, and we have a large number of operational personnel and employees located in China. Therefore, factors affecting military, political or economic relationship between China and Taiwan could have an adverse effect on our business, financial condition and operating results.

Risks Related to Our Corporate Structure and Our Common Shares

Our share price may be volatile and you may be unable to sell your shares at or above the offering price, if at all.

Our common shares began trading on The NASDAQ Global Market in April 2010. Limited trading volumes and liquidity may limit the ability of shareholders to purchase or sell our common shares in the amounts and at the times they wish. In addition, the financial markets in the United States and other countries have experienced significant price and volume fluctuations, and market prices of technology companies have been and continue to be extremely volatile. Since the commencement of trading of our common shares on The NASDAQ Global Market to the end of August 2011, our share price ranged from a low of $7.88 to high of $17.91. Volatility in the price of our shares may be caused by factors outside our control and may be unrelated or disproportionate to our operating results.

The market price for our common shares may be volatile and subject to wide fluctuations in response to factors, including:


•	actual or anticipated fluctuations in our operating results;


•	general economic, industry, regional and global market conditions;


•	our failure to meet analysts' expectations, including expectation regarding our revenue, gross profit and operating expenses;


•	changes in financial estimates and outlook by securities research analysts;


•	announcements regarding intellectual property litigation involving us or our competitors;


•	announcements by us or our competitors of new products, acquisitions, strategic partnerships, joint ventures or capital commitments;


•	announcements of technological or competitive developments;


•	regulatory developments in our target markets affecting us, our customers or our competitors;


•	our ability to enter into new market segments, gain market share, diversify our customer base and successfully secure manufacturing capacity;


•	our ability to increase our gross profit;


•	changes in the estimation of the future size and growth rate of our markets;


•	additions or departures of key personnel;


•	announcement of sales of our securities by us or by our major shareholders;


•	general economic or political conditions in China; and


•	and other factors.

In the past, securities class action litigation has often been brought against a company following periods of volatility in such company's share price. This type of litigation could result in substantial costs and divert our management's attention and resources. These market fluctuations may also materially and adversely affect the market price of our shares

Being a public company increases our administrative costs and divert management's attention.

As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, as well as new rules

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subsequently implemented by the SEC, has required changes in corporate governance practices of public companies. In addition to final rules and rule proposals already made by the SEC, the NASDAQ Stock Market has revised and may continue to update its requirements for listed companies. We expect these new rules and regulations, including those under Section 404 of the Sarbanes-Oxley Act relating to internal control over financial reporting, to increase our legal and financial compliance costs and to make some activities more time consuming and costly. We have and will continue to adopt additional internal controls and disclosure controls and procedures, hire additional accounting and finance personnel, and have to bear additional costs associated with preparing and distributing periodic public reports. These rules and regulations could increase our administrative costs and divert our management's attention, which may adversely affect our business, financial condition or results of operations.

Furthermore, we have recently transitioned from being a foreign private issuer to a domestic issuer and beginning on July 1, 2011, we were required under current rules of the SEC, to report our financial statements under U.S. GAAP and to make significantly more disclosures under the Securities and Exchange Act of 1934, as amended, including those related to our annual proxy statements. We expect to incur additional legal, accounting and other expenses in order to meet the additional reporting requirements as a domestic issuer.

We may need additional capital, and the sale of additional common shares or other equity securities could result in additional dilution to our shareholders.

We believe that our current cash and cash equivalents and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs for at least the next twelve months. We may, however, require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If our resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity securities could result in additional dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

Anti-takeover provisions in our bye-laws could make an acquisition of us, which may be beneficial to our shareholders, more difficult and may prevent attempts by our shareholders to replace or remove our current management.

Certain provisions in our bye-laws may delay or prevent an acquisition of us or a change in our management. In addition, by making it more difficult for shareholders to replace members of our board of directors, these provisions also may frustrate or prevent any attempts by our shareholders to replace or remove our current management because our board of directors is responsible for appointing the members of our management team. These provisions include:


•	the ability of our board of directors to determine the rights, preferences and privileges of our preferred shares and to issue the preferred shares without shareholder approval;


•	advance notice requirements for election to our board of directors and for proposing matters that can be acted upon at shareholder meetings; and


•	the requirement to remove directors by a resolution passed by at least two-thirds of the votes cast by the shareholders having a right to attend and vote at the shareholder meeting.

These provisions could make it more difficult for a third-party to acquire us, even if the third-party's offer may be considered beneficial by many shareholders. As a result, shareholders may be limited in their ability to obtain a premium for their shares.

Insiders have substantial control over us, which could adversely affect the market price of our shares.

Our Chief Executive Officer, certain members of our management and directors, beneficially owned, in the aggregate, approximately 21% of our outstanding common shares as of June 30, 2011. As a result, these shareholders will be able to exert significant control over all matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions, such as a merger, consolidation, takeover or other business combination involving us. This concentration of ownership may also discourage, delay or prevent a change in control of our company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company and may reduce the trading price of our shares. Furthermore, the interests of these insiders could conflict with the interests of our other shareholders and, accordingly, any of them may take actions that favor their own interests and which may not be in the best interests of our other shareholders. These actions may be taken even if they are opposed by our other shareholders.

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Item 1B.	Unresolved Staff Comments

None.


Item 2.	Properties

As of July 31, 2011, our primary U.S. facility, which houses our research and design function, as well as elements of marketing and administration, is located in Sunnyvale, California. We conduct our manufacturing, research and development, sales and marketing and administration in Asia and North America. We lease all properties used in our business. The following table sets forth the location, size and primary use of our properties:



Location	Size (Building) (in square feet)	Primary Use
475 Oakmead Parkway Sunnyvale, California, USA 94085	57,000	Research and development, marketing and sales, administration

Unit 701 Tesbury Centre, 28 Queen's Road East, Wanchai, Hong Kong	1,188	Sales and distribution

Room 801, Building 8, Zhongjian Business Building, No. 78, Shuikengwei Street, Macau	290	Manufacturing support

Building 5/8/9, No. 91, Lane 109, Rongkang Road, Songjiang District, Shanghai, China 201614	225,082	Packaging and testing, manufacturing support

Building B1, Dongkai Industrial Park, Songjiang Export Process Zone, Area B, Songjiang, Shanghai, China 201614	229,250	Packaging and testing, manufacturing support

Room 1002-1005, Building 1 Jiali BuYeCheng No. 218 Tianmu W. Road Zhabei District, Shanghai, China 200070	6,000	Marketing and field application engineering support

East 10F., Matshunichi Building, No.9996 Shennan Blvd, Shenzhen High-tech Park, Nanshan District, Shenzhen, China 518057	7,097	Marketing and field application engineering support

9F, No.292, Yangguang St., Neihu Dist., Taipei City 11491, Taiwan R.O.C.	17,642	Marketing and field application engineering support, research and development

11th Floor, Novel-tech Building 201-6, Nonhyun-Dong, Gangnam-Gu, Seoul, Korea 135-010	2,000	Marketing and field application engineering support

6F, Nihonbashi Honcho Plaza Building Nihonbashi Honcho 2-6-1, Chuo Ku Tokyo 103-0023	712	Marketing and field application engineering support

We believe that our current facilities are adequate and that additional space will be available on commercially reasonable terms for the foreseeable future.

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Item 3.	Legal Proceedings

We are currently not a party to any material legal proceedings. We have in the past, and may from time to time in the future, become involved in legal proceedings arising from the normal course of business activities. The semiconductor industry is characterized by frequent claims and litigation, including claims regarding patent and other intellectual property rights as well as improper hiring practices. Irrespective of the validity of such claims, we could incur significant costs in the defense thereof or could suffer adverse effects on our operations.

Item 4. Removed and Reserved

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PART II


Item 5.	Market for Registrant's Common Shares, Related Shareholder Matters and Issuer Purchases of Equity Securities

Market Price of Our Common Shares

Our common share has traded on the NASDAQ Global Market since April 29, 2010, under the symbol AOSL. The following table sets forth, for the period indicated, the high and low sales prices of our common share as reported by the NASDAQ Global Market.



2010		High		Low
Fourth Fiscal Quarter:	April 29, 2010 - June 30, 2010	$	17.91	$	13.80

2011		High		Low
First Fiscal Quarter:	July 1, 2010 - September 30, 2010	$	13.65	$	9.94
Second Fiscal Quarter:	October 1, 2010 - December 31, 2010	$	13.56	$	11.00
Third Fiscal Quarter:	January 1, 2011 - March 31, 2011	$	14.45	$	12.44
Fourth Fiscal Quarter:	April 1, 2011 - June 30, 2011	$	14.18	$	12.33

2012
First Fiscal Quarter (through August 31, 2011):	July 1, 2011 - August 31, 2011	$	13.23	$	7.88

Holders of Our Common Shares

As of July 31, 2011, there were approximately 36 registered shareholders, not including those shares held in street or nominee name.

Dividend Policy

We have never declared or paid cash dividends on our common shares. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any dividends on our common share in the foreseeable future. Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, general business conditions and other factors that our board of directors may deem relevant.

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Share Performance Graph

The following graph compares the total cumulative shareholder return on our common shares with the total cumulative return of the NASDAQ Composite Index and the Philadelphia Semiconductor Index for the period from April 29, 2010 (the date our common share commenced trading on the NASDAQ Global Market) through June 30, 2011 , the end of our last fiscal year. The graph assumes an investment of $100 on April 29, 2010 and the reinvestment of any dividends for NASDAQ Composite Index and Philadelphia Semiconductor Index.

The comparisons in the graph below are required by the SEC and are not intended to forecast or be indicative of possible future performance of our common shares.

The above Stock Performance Graph and related information shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into such filing.

Recent Sales of Unregistered Securities

On December 3, 2010, we acquired control of APM in a cash and share transaction. In connection with the acquisition, we issued an aggregate of 1,766,159 common share at $13.06 per share to the stockholders of APM. The issuance was exempt from the registration requirement of of the Securities Act of 1933, as amended, in reliance on Section 4(2) thereunder.

Use of Proceeds

The initial public offering ( the "IPO") of our common share was effected through a Registration Statement on Form F-1 (File No. 333-165823) that was declared effective by the Securities and Exchange Commission on April 28, 2010. From the effective date of the registration statement through June 30, 2011, we have invested all of $53.3 million of the net proceeds received by us from the IPO in our in-house packaging and testing facilities, including $17.0 million for the acquisition of APM. We believe our in-house packaging and testing capability provides us with improved gross margin, faster time to market for our new products, and competitive advantages in proprietary packaging technology and product quality.

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Issuer Purchases of Equity Securities

Our board of directors authorized a $25.0 million share repurchase program on October 22, 2010. Under this repurchase program and subject to supervision and oversight by our board of directors, our management may, from time to time, repurchase shares from the open market or in privately negotiated transactions. Shares repurchased are accounted for as treasury shares and the total cost of shares repurchased is recorded as a reduction to shareholders' equity. The following table sets for the share repurchases under this program during the fiscal year ended June 30, 2011.



Period	Total Number of Shares (or Units) Purchased	Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Be Purchased Under the Plans or Programs
May 1, 2011 to May 31, 2011	50,000	$	13.90	50,000	$	24,305,000

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Item 6. Selected Consolidated Financial Data

We have derived the selected consolidated statements of income data for the fiscal years ended June 30, 2011, 2010 and 2009 and selected consolidated balance sheet data as of June 30, 2011 and 2010 from our audited consolidated financial statements and related notes included elsewhere in this report. We have derived the selected consolidated statements of income data for the fiscal years ended June 30, 2008 and 2007 and selected consolidated balance sheets as of June 30, 2009, 2008 and 2007 from consolidated financial statements not included in this report. The information set forth below is not necessarily indicative of results of future operations, and should be read in conjunction with Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K.



	Year Ended June 30,
	2011 (3)(4)			2010			2009			2008 (2)			2007 (1)
	(in thousands, except per share data)
Consolidated Statements of Income (Loss):
Revenue	$	361,308		$	301,840		$	185,076		$	273,880		$	201,583
Cost of goods sold	256,087			221,649			146,510			208,373			160,420
Gross profit	105,221			80,191			38,566			65,507			41,163

Operating expenses:
Research and development	29,470			20,943			19,273			22,527			15,291
Selling, general and administrative	37,937			26,323			20,443			35,310			16,404
Total operating expenses	67,407			47,266			39,716			57,837			31,695
Operating income (loss)	37,814			32,925			(1,150		)	7,670			9,468

Interest income	280			39			648			2,044			1,590
Interest expense	(263		)	(189		)	(587		)	(129		)	(573		)
Income (loss) on equity investment in APM	1,768			6,546			(4		)	2,633			1,015
Gain on equity interest in APM	837			—			—			—			—
Income (loss) before income taxes	40,436			39,321			(1,093		)	12,218			11,500

Income tax expense (benefit)	2,609			1,497			(192		)	1,584			1,076
Net income (loss)	$	37,827		$	37,824		$	(901	)	$	10,634		$	10,424

Less accretion on redeemable convertible preferred shares	—			—			—			(17		)	(195		)
Less 8% non-cumulative dividends on
convertible preferred shares	—			(3,453		)	—			(4,144		)	(2,874		)
Net income (loss) attributable to common shareholders - Basic	37,827			34,371			(901		)	6,473			7,355

Adjustment to net income (loss) for dilutive securities	—			3,453			—			1,604			1,604
Net income (loss) attributable to common shareholders - Diluted	$	37,827		$	37,824		$	(901	)	$	8,077		$	8,959

Net income (loss) per share attributable to common shareholders
Basic per share	$	1.61		$	3.24		$	(0.11	)	$	0.83		$	0.96
Diluted per share	$	1.51		$	1.78		$	(0.11	)	$	0.47		$	0.54
Weighted average number of shares used in computing net income (loss) per share attributable to common shareholders
Basic shares	23,495			10,594			7,914			7,837			7,686
Diluted shares	24,989			21,192			7,914			17,017			16,711

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	Year Ended June 30,
	2011 (3)(4)		2010		2009		2008 (2)		2007 (1)
	(in thousands)
Consolidated Balance Sheet Data:
Total assets	$	347,438	$	258,656	$	160,820	$	161,192	$	130,607
Total liabilities	$	87,188	$	69,210	$	66,320	$	69,046	$	54,077
Redeemable convertible preferred shares	$	—	$	—	$	—	$	—	$	50,387
Total shareholders' equity	$	260,250	$	189,446	$	94,500	$	92,146	$	26,143

(1)

Effective on July 1, 2006, we adopted ASC Topic 718 (formerly SFAS No. 123R), "Share-Based Payment" using the prospective transition method to account for options granted to employees using the straight-line method of attribution for share-based compensation. On July 1, 2008, we concluded that the graded vesting method of attribution, which is an allowable alternative under U.S. GAAP, was a preferable accounting principle. Accordingly, we changed from the straight-line method to the graded vesting method of attribution and applied the change in accounting principle retrospectively to reflect the cumulative and period effects of applying the new accounting policy.

(2)

Beginning on July 1, 2007, we changed our revenue recognition method from sell-through to sell-in as we determined that we were able to make reliable estimates of stock rotation returns and price adjustments. This change in estimate resulted in an increase of $25.9 million in revenue, net of estimated price adjustments and stock rotation rights, and an increase of $6.3 million in net income for fiscal year 2008.

(3)

We held a 40.3% equity interest in APM at June 30, 2010. We made an additional equity investment of $1.8 million in APM in October 2010 and held a 43% equity interest in APM immediately prior to the APM acquisition, and the investment was accounted for under the equity method of accounting. On December 3, 2010, we acquired all of the outstanding shares of APM and APM's operating results were reflected in our consolidated financial statements since the date of the acquisition.

(4)

Upon the completion of the APM acquisition in fiscal year 2011, we performed a review and assessment of the useful lives of our certain property and equipment. Based on the results of our review, we revised the estimated useful life of our manufacturing machinery and equipment for depreciation purposes from 5 years to 8 years beginning December 1, 2010 on a prospective basis. The effect of this accounting change was to decrease depreciation expense related to cost of goods sold by $5.1 million, increase net income by approximately $3.9 million, net of a tax effect of $1.2 million, and increase basic net income per share by approximately $0.17 and increase diluted net income per share by approximately $0.16 for fiscal year 2011.

Conversion from IFRS to U.S. GAAP

We formerly prepared our consolidated financial statements under IFRS and filed our IFRS financial statements for the fiscal year ended June 30, 2010 in our annual report on Form 20-F. Pursuant to SEC requirements, we assessed our ownership structure as of December 31, 2010 and determined that we no longer qualified as a foreign private issuer under applicable SEC rules. As a result, beginning July 1, 2011, we are required to report our consolidated financial statements under U.S. GAAP and file our annual report on Form 10-K, as well as to comply with additional SEC reporting obligations as a domestic issuer. Accordingly, we have converted our consolidated financial statements under IFRS to U.S. GAAP. A summary of significant relevant differences of individual items in the financial statements between IFRS and U.S. GAAP and their impact to our historical consolidated financial data above is outlined below:

Redeemable convertible preferred shares

In connection with changes made to the terms of our bye-laws in December 2006, our preferred shares were amended to include certain rights and features such as deemed liquidation and variable conversion to common shares. Accordingly, these redeemable convertible preferred shares were classified and presented as mezzanine equity under U.S. GAAP for the fiscal year ended June 30, 3007. Following changes to our bye-laws in October 2007 to reverse these amended terms, all preferred shares were reclassified to equity under U.S. GAAP.

Under IFRS, such preferred shares were classified as a liability for the fiscal year ended June 30, 2007. This

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reclassification required that the preferred shares be marked-to-market at each reporting period. As a result, our IFRS financial statements as reported in our previous annual report in Form 20-F included a non-cash, non-operating charge of $30.9 million and $42.5 million for the fiscal years ended June 30, 2008 and 2007, respectively. Following further changes to our bye-laws in October 2007, all preferred shares were reclassified to equity under IFRS and no further charges were incurred.

All our preferred shares were converted to common shares concurrent with the close of our IPO in May 2010.

Inventory reserves

We record inventories at the lower-of-cost-or-market under both U.S. GAAP and IFRS. Under U.S. GAAP, a write-down of inventory to the lower-of-cost-or-market creates a new cost basis that subsequently cannot be reversed based on changes in circumstances. Under IFRS, when circumstances that previously caused the inventory write down no longer exist or when there is clear evidence of an increase in net realizable value, the amount of the write-down is reversed even though the associated inventories have not been sold. The impact to the statement of income (loss) due to the difference between U.S. GAAP and IFRS related to inventory reserves for the fiscal years ended June 30, 2010, 2009, 2008 and 2007 was $100,000, $320,000, $18,000 and nil, respectively.

Share-based compensation expense

Under U.S. GAAP, prior to July 1, 2006, we accounted for options granted to employees using the intrinsic value method as prescribed in Accounting Principles Board (“APB”) Opinion No. 25, "Accounting for Stock Issued to Employees". Under the intrinsic value method, deferred compensation expense is recorded on the date of grant if the fair value of the underlying share exceeds the exercise price, and expense is recognized on a straight-line basis over the vesting period of the grant, generally five years. Effective on July 1, 2006, we adopted ASC Topic 718 (formerly SFAS No. 123R), “Share-Based Payment” using the prospective transition method to account for options granted to employees. Under the prospective method, new awards (or awards modified, repurchased, or canceled after the effective date) are accounted for under the provision of ASC Topic 718, which requires the measurement and recognition of compensation expense for all share-based awards made to employees and directors based on estimated fair values of the awards. We amortize the fair value of options or equity awards using the graded vesting attribution method over the respective vesting period which is generally over five years.

Under IFRS, we accounted for share-based compensation expense for all share-based awards made to employees and directors based on the estimated fair values of the awards effective on January 1, 2005. The fair value of options or equity awards is amortized using the graded vesting attribution method over the respective vesting period which is generally over five years.

The difference in share-based compensation expense related to accounting for the different transition dates between U.S. GAAP and IFRS and the application of APB 25 for the fiscal years ended June 30, 2010, 2009, 2008 and 2007 was $115,000, $45,000, ($384,000) and $737,000, respectively.

Investment in APM

We have made various investments in APM since APM's inception in July 2004. Prior to our acquisition of APM in December 2010, the investment was accounted for under the equity method of accounting under both IFRS and U.S. GAAP. The difference between U.S. GAAP and IFRS for the fiscal years ended June 30, 2010, 2009, 2008 and 2007 was ($251,000), ($31,000), $189,000 and $73,000, respectively.

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Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of the financial condition and results of our operations in conjunction with our consolidated financial statements and the notes to those statements included elsewhere in this annual report. Our consolidated financial statements contained in this annual report are prepared in accordance with U.S. GAAP.

Overview

We are a designer, developer and global supplier of a broad range of power semiconductors. We have a broad portfolio of power semiconductors that we actively market and we seek to continuously add to our product portfolio each year. Our portfolio of power semiconductors is extensive, with over 800 products, and has grown rapidly with the introduction of over 120 new products each year during the past three fiscal years. In addition, our patent portfolio has grown to include 176 patents and 191 patents applications in the United States at the end of fiscal year 2011. We seek to differentiate ourselves by integrating our expertise in device physics, process technology, design and advanced packaging to optimize product performance and cost. Our portfolio of products targets high-volume applications, including portable computers, flat panel TVs, smart phones, battery packs, portable media players, motor control and power supplies.

During the fiscal year ended June 30, 2011, we launched several key product families and technologies to enable high efficiency power conversion solutions. We broadened our MOSFET product family by expanding our high voltage product line with the introduction of the AlphaMOS ^TM and AlphaIGBT ^TM technology platform that lower on-resistance to enable high efficiency AC-DC conversion. The development in high voltage product line enables us to broaden the markets we serve. We also released our third generation EzBuck DC-DC Power IC family which offers higher efficiency and output current to power the latest chipsets used in a wide range of consumer applications. Our new PairFET advanced packaging technology allows high power density DC-DC conversion in computing and communication applications by integrating two MOSFETs in a single package, with the performance of two independent MOSFETs.

Our transnational business model leverages global resources, including leading research and development expertise in the United States, cost-effective semiconductor manufacturing in Asia and localized sales and technical support in several fast-growing electronics hubs globally. Our core research and development team, based in Silicon Valley, is complemented by our design center in Taiwan and process, packaging and testing engineers in China. While we currently utilize third-party foundries for our wafer fabrication, we are in the process of transition from a fabless to a “fab-lite” business model. Under this model, we intend to allocate our wafer manufacturing requirements to both in-house and outsourced capacities, which we believe would allow us to accelerate technology development, bring products to market faster, reduce manufacturing costs and improve our long-term financial performance. As part of this transition, we recently announced our intention to acquire certain assets associated with a 200mm wafer fabrication facility located in Hillsboro, Oregon from IDT. We also deploy and implement our proprietary power discrete processes and equipment at third-party foundries to maximize the performance and quality of our products. In addition, in December 2010, we acquired control of APM. After the acquisition, APM became our wholly-owned subsidiary and we primarily rely upon our two in-house facilities for packaging and testing. We believe our in-house packaging and testing capability provides us with a competitive advantage in proprietary packaging technology, product quality, cost, flexibility and cycle time.

On December 3, 2010, we acquired control of APM in a cash and stock transaction with a purchase price of $40.0 million. We had a 43% equity interest in APM prior to the acquisition and the equity investment was accounted for under the equity method of accounting. After the acquisition, APM became our wholly-owned subsidiary.

We formerly prepared our consolidated financial statements under IFRS and filed our IFRS financial statements for the fiscal year ended June 30, 2010 in our annual report on Form 20-F. Pursuant to the SEC requirements, we assessed our ownership structure as of December 31, 2010 and determined that we no longer qualified as a foreign private issuer. As a result, beginning on July 1, 2011, we are required to report our financial statements under U.S. GAAP and file our annual report on Form 10-K, as well as to comply with additional SEC reporting obligations as a domestic issuer. Accordingly, we have converted our consolidated financial statements from IFRS to U.S. GAAP. See "Item 6. Selected Consolidated Financial Data" for a discussion of relevant differences of individual items in the financial statements between IFRS and U.S. GAAP.

Our revenue was $361.3 million for the fiscal year ended June 30, 2011, represented an increase of $59.5 million, or 19.7%, from $301.8 million for the fiscal year ended June 30, 2010. Our net income was $37.8 million, or $1.51 per diluted

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share, for fiscal year 2011, compared to a net income of $37.8 million, or $1.78 per diluted share, for fiscal year 2010.

Factors affecting our performance

Our performance is affected by several key factors, including the following:

Global economic conditions : Because our products primarily serve consumer applications, a deterioration of the global and regional economic conditions could materially affect our revenue and results of operations. In June 2011, we began to experience a general slow down of global economic conditions, particularly in our core computing and consumer markets, that have adversely affected our results of operations. We cannot be certain as to how long this trend will continue and how much negative impact it will have on our results of operations.

Distributor ordering patterns and seasonality : Our distributors place purchase orders with us based on their forecasts of end customer demand, and this demand may vary significantly depending on the sales outlooks and market and economic conditions of end customers. Because these forecasts may not be accurate, channel inventory held at our distributors may fluctuate significantly, which in turn may prompt distributors to make significant adjustments to their purchase orders placed with us. As a result, our revenue and operating results may fluctuate significantly from quarter to quarter. In addition, because our products are used in consumer electronics products, our revenue is subject to seasonality. Our sales seasonality is affected by a number of factors, including global and regional economic conditions, revenue generated from new products, changes in distributor ordering patterns in response to channel inventory adjustments and end customer demand for our products and fluctuations in consumer purchase patterns prior to major holiday seasons. However, in recent period broad fluctuations in the semiconductor markets and the global economic conditions have had a more significant impact on our results than seasonality.

Product introductions and customers' specification: Our success depends on our ability to introduce products on a timely basis that meet our customers' specifications. Both factors, timeliness of product introductions and conformance to customers' requirements, are equally important in securing design wins with our customers. Our failure to introduce products on a timely basis that meet customers' specifications could adversely affect our financial performance.

Erosion of average selling price: Erosion of average selling prices of established products is typical in our industry. Consistent with this historical trend, we expect that average selling prices of our established products will continue to decline in the future. However, as a normal course of business, we seek to offset the effect of declining average selling prices by reducing manufacturing cost of existing products and introducing new and higher value products.

Manufacturing costs: Our gross margin may be affected by our manufacturing costs, including pricing of wafers and semiconductor raw materials, which may fluctuate from time to time largely due to the market demand and supply. Capacity utilization may also affect our gross margin because we have certain fixed costs associated with our in-house packaging and testing facilities. If we are unable to utilize the capacity of our in-house manufacturing facilities at a desirable level, our gross margin may be adversely affected. During fiscal year 2011, we acquired APM and continued to expand our in-house packaging and testing capacity.

As part of our transition to a "fab-lite" business model, on August 27, 2011, we announced our intention to acquire certain assets associated with a wafer fabrication facility from IDT, which is expected to close prior to January 31, 2012. We expect the IDT acquisition to accelerate our technology and product development and reduce our manufacturing costs, thereby improving our long-term financial performance. However, we currently anticipate an initial ramp-up period of two to three quarters following the proposed acquisition, and during this period, we do not expect to observe any significant improvement in our gross margin as a result of this acquisition. Following the initial-ramp period, we expect the “fab-lite” approach would have a positive impact on our gross margin by allowing us to develop high-value products more quickly and in a more cost-effective manner.

Other factors that may affect comparability

APM acquisition: We held a 40.3% equity interest in APM at June 30, 2010. We made an additional equity investment of $1.8 million in APM in October 2010 resulting in a 43% equity interest in APM. The investment was accounted for under the equity method of accounting through the date of acquisition. On December 3, 2010, we acquired APM and APM's operating results were reflected in our consolidated financial statements subsequent to that date.

Change in accounting estimate: During fiscal year 2011, upon the completion of APM acquisition, we performed a review and assessment of the useful lives of certain of our property and equipment. Based on the results of our review, we revised the estimated useful life of our manufacturing and facility equipment for depreciation purposes from 5 years to 8 years beginning December 1, 2010 on a prospective basis. The effect of this change was to decrease depreciation expense by $5.1

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million, increase net income by approximately $3.9 million, net of a tax effect of $1.2 million, and increase basic net income per share by approximately $0.17 and increase diluted net income per share approximately by $0.16 for fiscal year 2011.

Public company expenses: Our general and administrative expenses have increased since our IPO effective in April 2010 due to the additional legal, accounting and consulting fees as well as additional headcount that we added in order to comply with additional requirements as a public company, including costs associated with establishing and maintaining internal control over financial reporting and preparing and filing periodic reports required under federal securities laws. We also established the Employee Share Purchase Plan (the “ESPP”) effective upon the completion of the IPO, and accordingly we incurred share-based compensation expenses associated with such purchase rights. In addition, our recent transition from a foreign private issuer to a domestic issuer status under the federal securities laws also requires us to incur additional legal and accounting expenses in order to comply with incremental SEC reporting obligations for a domestic issuer.

Principal line items of statements of income (loss)

The following describes the principal line items set forth in our consolidated statements of income (loss):

Revenue

We generate revenue from the sale of our power semiconductors, consisting of power discretes and power ICs. Historically, a majority of our revenue was derived from power discrete products and a small but growing amount was derived from power IC products. Because our products typically have three to five years life cycles, the rate of new product introductions is an important driver of revenue growth over time. We believe that expanding the breadth of our product portfolio is important to our business prospects, because it provides us with an opportunity to increase our total bill-of-materials within an electronic system and to address the power requirements of additional electronic systems. On December 3, 2010, we acquired APM and our revenue included APM's revenue generated by providing packaging and testing services to third-parties since the APM acquisition.

Our product revenue includes the effect of the estimated stock rotation returns and price adjustments that we expect to provide to our distributors. Stock rotation returns are governed by contract and are limited to a specified percentage of the monetary value of products purchased by the distributor during a specified period. At our discretion or upon our direct negotiations with ODMs or OEMs, we may elect to grant special pricing that is below the prices at which we sold our products to the distributors; in these situations, we will grant price adjustments to the distributors reflecting such special pricing. We estimate the price adjustments for inventory at the distributors based on factors such as distributor inventory levels, pre-approved future distributor selling prices, distributor margins and demand for our products.

Cost of goods sold

Our cost of goods sold primarily consists of costs associated with semiconductor wafers, packaging and testing, personnel, including share-based compensation expense, overhead attributable to manufacturing, operations and procurement, yield improvements, capacity utilization, warranty and inventory reserves. As the volume of sales increases, we expect cost of goods sold to increase in absolute dollar amount.

Operating expenses

Our operating expenses consist of research and development and selling, general and administrative expenses. We expect that our total operating expenses will generally increase in absolute dollar amount over time due to our belief that our business will continue to grow. However, our operating expenses as a percentage of revenue may fluctuate from period to period.

Research and development expenses. Our research and development expenses consist primarily of salaries, bonuses, benefits, share-based compensation expense, expenses associated with new product prototypes, travel expenses, fees for engineering services provided by outside contractors and consultants, amortization of software and design tools, depreciation of equipment and overhead costs for research and development personnel. As we continue to invest significant resources in developing new technologies and products, we expect our research and development expenses to increase in absolute dollar amount.

Selling, general and administrative expenses. Our selling, general and administrative expenses consist primarily of salaries, bonuses, benefits, share-based compensation expense, product promotion costs, occupancy costs, travel expenses, expenses related to sales and marketing activities, amortization of software, depreciation of equipment, maintenance costs and other expenses for general and administrative functions as well as costs for outside professional services, including legal, audit and accounting services. We expect our selling, general and administrative expenses to increase in absolute dollar amount as we

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expand our business.

Income (loss) on equity investment in APM

We had a 40.3% equity interest in APM at June 30, 2010 and a 43% equity interest in APM prior to the APM acquisition on December 3, 2010. Our investment in APM was accounted for under the equity method of accounting. Accordingly, we recorded income (loss) on equity investment in APM in our statements of income (loss).

Income tax expense (benefit)

We are subject to income taxes in various jurisdictions. Significant judgment and estimates are required in determining our worldwide income tax expense. The calculation of tax liabilities involves dealing with uncertainties in the application of complex tax regulations of different jurisdictions globally. We establish accruals for potential liabilities and contingencies based on a more likely than not threshold to the recognition and de-recognition of uncertain tax positions. If the recognition threshold is met, the applicable accounting guidance permits us to recognize a tax benefit measured at the largest amount of tax benefit that is more than likely to be realized upon settlement. If the actual tax outcome of such exposures is different from the amounts that were initially recorded, the differences will impact the income tax and deferred tax provisions in the period in which such determination is made. Changes in the location of taxable income (loss) could result in significant changes in our income tax expense.

We record deferred tax assets to the extent it is more likely than not that we will be able to utilize them, based on historical profitability and our estimate of future taxable income in a particular jurisdiction. Our judgments regarding future taxable income may change due to changes in market conditions, changes in tax laws, tax planning strategies or other factors. If our assumptions and consequently our estimates change in the future, the deferred tax assets may increase or decrease, resulting in corresponding changes in income tax expense. Our effective tax rate is highly dependent upon the geographic distribution of our worldwide profits or losses, the tax laws and regulations in each geographical region where we have operations, the availability of tax credits and carry-forwards and the effectiveness of our tax planning strategies.

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Operating results

Comparison of fiscal year 2011 to fiscal year 2010 and comparison of fiscal year 2010 to fiscal year 2009

The following tables set forth selected statements of income (loss) data derived from our audited consolidated financial statements, also expressed as a percentage of revenue, for the fiscal years ended June 30, 2011, 2010 and 2009. Our historical results of operation are not necessarily indicative of the results for any future period.



	Fiscal Year Ended June 30,
	2011			2010			2009			2011		2010		2009
	(in thousands)									(% of revenue)
Revenue	$	361,308		$	301,840		$	185,076		100.0	%	100.0	%	100.0	%
Cost of goods sold (1)	256,087			221,649			146,510			70.9	%	73.4	%	79.2	%
Gross profit	105,221			80,191			38,566			29.1	%	26.6	%	20.8	%

Operating expenses:
Research and development (1)	29,470			20,943			19,273			8.2	%	7.0	%	10.4	%
Selling, general and administrative (1)	37,937			26,323			20,443			10.5	%	8.7	%	11.0	%
Total operating expenses	67,407			47,266			39,716			18.7	%	15.7	%	21.4	%
Operating income (loss)	37,814			32,925			(1,150		)	10.4	%	10.9	%	(0.6	)%

Interest income	280			39			648			0.1	%	—	%	0.3	%
Interest expense	(263		)	(189		)	(587		)	(0.1	)%	(0.1	)%	(0.3	)%
Income (loss) on equity
investment in APM	1,768			6,546			(4		)	0.5	%	2.2	%	—	%
Gain on equity interest in APM	837			—			—			0.3	%	—	%	—	%
Income (loss) before income taxes	40,436			39,321			(1,093		)	11.2	%	13.0	%	(0.6	)%
Income tax expense (benefit)	2,609			1,497			(192		)	0.7	%	0.5	%	(0.1	)%
Net income (loss)	$	37,827		$	37,824		$	(901	)	10.5	%	12.5	%	(0.5	)%

(1) Includes share-based compensation expense, which was allocated as follows:



	Fiscal Year Ended June 30,
	2011		2010		2009		2011		2010		2009
	(in thousands)						(% of revenue)
Cost of goods sold	$	629	$	317	$	381	0.2	%	0.1	%	0.2	%
Research and development	$	1,716	$	905	$	1,272	0.5	%	0.3	%	0.7	%
Selling, general and administrative	$	3,829	$	2,337	$	1,931	1.1	%	0.8	%	1.0	%

Revenue

The following is a summary of revenue by product type:



	Year Ended June 30,						Change
	2011		2010		2009		2011				2010
	(in thousands)						(in thousands)		(in percentage)		(in thousands)		(in percentage)
Power discrete	$	284,094	$	258,037	$	165,712	$	26,057	10.1	%	$	92,325	55.7	%
Power IC	62,706		43,803		19,364		18,903		43.2	%	24,439		126.2	%
Packaging and testing services	14,508		—		—		14,508		100.0	%	—		—	%
	$	361,308	$	301,840	$	185,076	$	59,468	19.7	%	$	116,764	63.1	%

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Our revenue was $361.3 million for fiscal year 2011, increased by $59.5 million, or 19.7%, from $301.8 million for fiscal year 2010. The increase was primarily as a result of a 10.0% increase in unit shipments, a 4.6% increase in average selling prices due to favorable product mix and a $14.5 million increase in packaging and testing services revenue generated by APM since we acquired APM in December 2010. Toward the end of fourth quarter in fiscal year 2011, we began to experience a general slow down on a global basis in our core computing and consumer markets and softened demand causing a shift in product mix and average selling prices. We introduced 196 and 145 new products during fiscal years 2011 and 2010, respectively. New products introduced in fiscal years 2011 included high-voltage and medium-voltage products that were developed based on our new technology platforms. Revenue from these high-voltage and medium-voltage products were ramped up slowly as we gradually gained design wins in the new application markets. As we continued to expand our power IC product family, revenue from our power IC products for fiscal year 2011 increased by $18.9 million, or 43.2%, to $62.7 million from $43.8 million for fiscal year 2010.

Our revenue was $301.8 million for fiscal year 2010, increased by $116.8 million, or 63.1%, from $185.1 million for fiscal year 2009. The increase was primarily as a result of a 76.3% increase in unit shipments due to increased end customer demand for our products, offset by a 7.5% decline in average selling prices. We introduced 145 and 121 new products during fiscal years 2010 and 2009, respectively. As we continued to expand our power IC product family, revenue from our power IC products for fiscal year 2010 increased by $24.4 million, or 126.2%, to $43.8 million from $19.4 million for fiscal year 2009.

Cost of goods sold and gross profit



	Year Ended June 30,									Change
	2011			2010			2009			2011				2010
	(in thousands)									(in thousands)		(in percentage)		(in thousands)		(in percentage)
Cost of goods sold	$	256,087		$	221,649		$	146,510		$	34,438	15.5	%	$	75,139	51.3	%
Percentage of revenue	70.9		%	73.4		%	79.2		%

Gross profit	$	105,221		$	80,191		$	38,566		$	25,030	31.2	%	$	41,625	107.9	%
Percentage of revenue	29.1		%	26.6		%	20.8		%

Cost of goods sold was $256.1 million for fiscal year 2011, increased by $34.4 million, or 15.5%, from $221.6 million for fiscal year 2010, primarily as a result of increased unit shipments. Our gross margin improved by 2.5% to 29.1% for fiscal year 2011 from 26.6% for fiscal year 2010. This improvement was primarily due to higher factory utilization as the majority of our packaging and testing manufacturing was handled in-house after we acquired APM and a decrease in packaging and testing service fees paid to third-party contractors. We also changed our estimated depreciation life for our manufacturing machinery and equipment from 5 years to 8 years, which resulted in lower depreciation expense in fiscal year 2011. These cost reductions were partially offset by an increase in wafer prices from our primary foundry. We expect that our gross margin will continue to fluctuate in the future as a result of variations in our product mix, semiconductor wafer and raw material pricing, manufacturing labor cost and factory utilization.

Cost of goods sold was $221.6 million for fiscal year 2010, increased by $75.1 million, or 51.3%, from $146.5 million for fiscal year 2009, primarily as a result of increased unit shipments. Our gross margin improved by 5.8% to 26.6% for fiscal year 2010 from 20.8% for fiscal year 2009. This improvement was primarily due to lower material costs associated with our volume purchases and lower packaging and testing costs, including savings from increased utilization of our in-house packaging and testing facility during fiscal year 2010.

Research and development expenses



	Year Ended June 30,						Change
	2011		2010		2009		2011				2010
	(in thousands)						(in thousands)		(in percentage)		(in thousands)		(in percentage)
Research and development	$	29,470	$	20,943	$	19,273	$	8,527	40.7	%	$	1,670	8.7	%

Research and development expenses were $29.5 million for fiscal year 2011, increased by $8.5 million, or 40.7% from $20.9 million for fiscal year 2010. This increase was partially attributable to a $2.0 million increase in engineering and new products prototyping expenses as we introduced 196 new products during fiscal year 2011, compared to 145 new products in fiscal year 2010. In addition, we incurred $2.2 million incremental expenses in qualifying a new third-party fabrication facility

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to expand our manufacturing capacity. The increase in research and development expenses was also attributable to a $1.8 million increase in personnel expenses as we increased headcount and bonuses in fiscal year 2011, a $0.8 million increase in share-based compensation expense, and a $0.8 million increase in facility expenses as our corporate and research and development center in the U.S. was relocated to a larger facility in March 2010. As we continue to invest significant resources in developing new technologies and new products and expanding our manufacturing capacity, we expect our research and development expenses to increase in absolute dollar amount.

Research and development expenses were $20.9 million for fiscal year 2010, increased by $1.7 million, or 8.7% from $19.3 million for fiscal year 2009. This increase was primarily attributable to a $2.1 million increase in personnel expenses as we increased headcount and bonuses, while in fiscal year 2009, we implemented temporary salary reductions and holiday office closures in response to the global economic recession, which resulted in lower salary, bonus and vacation expenses. The increase in research and development expenses was partially offset by a $0.6 million decrease in engineering and new products prototyping expenses due to the timing of product prototyping and savings from increased research and development activities performed at our in-house packaging and testing facility, while we continued to invest in our new products development and introduced 145 new products in fiscal year 2010.

Selling, general and administrative expenses



	Year Ended June 30,						Change
	2011		2010		2009		2011				2010
	(in thousands)						(in thousands)		(in percentage)		(in thousands)		(in percentage)
Selling, general
and administrative	$	37,937	$	26,323	$	20,443	$	11,614	44.1	%	$	5,880	28.8	%

Selling, general and administrative expenses were $37.9 million for fiscal year 2011, increased by $11.6 million, or 44.1%, from $26.3 million for fiscal year 2010. This increase was primarily attributable to a $2.8 million increase in personnel expenses due to an increase in headcount and bonuses, a $1.9 million increase in sales commissions and sales samples associated with our revenue growth, and a $1.4 million increase in share-based compensation expense. In addition, we incurred $1.1 million of professional fees related to the conversion of our financial statements under IFRS to U.S. GAAP and a $0.9 million incremental expenses associated with the requirements of being a public company. The increase in selling, general and administrative expenses was also attributable to a $0.4 million increase in facility expenses as our corporate and research and development center in the U.S. was relocated to a larger facility in March 2010 and a $0.4 million of incremental professional services fees related to the APM acquisition in December 2010. These increases were partially offset by a $1.1 million decrease in audit, tax and legal expenses that were incurred in connection with our IPO in fiscal year 2010.

Selling, general and administrative expenses were $26.3 million for fiscal year 2010, increased by $5.9 million, or 28.8%, from $20.4 million for fiscal year 2009. This increase was primarily due to a $3.5 million increase in personnel expenses as we increased our headcount and bonuses in fiscal year 2010. We implemented temporary salary reductions and holiday office closures in fiscal year 2009 in response to the global economic recession, and these cost reduction measures resulted in lower salary, bonus and vacation expenses. The increase in selling, general and administrative expenses was also attributed to a $1.2 million increase in our sales commissions, product promotion and travel related expenses as we generated more revenue with increased sales and marketing activities during fiscal year 2010. The increase in selling, general and administrative expenses was also attributed to a $1.1 million increase in expenses related to our audit and IPO activities during fiscal year 2010. In addition, we became a public company in the fourth quarter of fiscal year 2010 and incurred an additional $0.2 million in expenses associated with the requirements of being a public company. These increases in selling, general and administrative expenses were partially offset by a $1.2 million reduction in legal costs related to a patent litigation which was settled in fiscal year 2009.

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Income (loss) on equity investment in APM



	Year Ended June 30,							Change
	2011		2010		2009			2011					2010
	(in thousands)							(in thousands)			(in percentage)		(in thousands)		(in percentage)
Income (loss) on equity
investment in APM	$	1,768	$	6,546	$	(4	)	$	(4,778	)	(73.0	)%	$	6,550	(163,750.0	)%

Income (loss) on equity investment in APM was $1.8 million for fiscal year 2011, decreased by $4.8 million, or 73.0%, from $6.5 million for fiscal year 2010. The decrease was primarily due to consolidation of APM's financial results into our financial statements since the APM acquisition in December 2010 and a $2.6 million benefit related to our share of deferred tax assets APM recognized during fiscal year 2010.

Income (loss) on equity investment in APM was $6.5 million and loss of $4,000 for the fiscal years ended June 30, 2010 and 2009, respectively. The increase was due to higher profitability generated by APM resulting from higher packaging and testing processing volume during fiscal year 2010, as well as a $2.6 million tax benefit recognized related to APM's deferred tax assets during fiscal year 2010.

Income tax expense (benefit)



	Year Ended June 30,							Change
	2011		2010		2009			2011				2010
	(in thousands)							(in thousands)		(in percentage)		(in thousands)		(in percentage)
Income tax expense
(benefit)	$	2,609	$	1,497	$	(192	)	$	1,112	74.3	%	$	1,689	(879.7	)%

Our income tax expense for the fiscal years ended June 30, 2011 and 2010 was $2.6 million and $1.5 million, respectively. Income tax expense increased by $1.1 million, or 74.3%, in fiscal year 2011 as compared to fiscal year 2010 due primarily to an increased percentage of our pretax book income in fiscal year 2011 being subject to the taxes in higher tax rate jurisdictions, largely as a result of our acquisition of APM in December 2010, partially offset by $0.5 million of increased U.S. federal research and development credits as a result of the extension of the U.S. federal research and development credit retroactive to December 31, 2009 during fiscal year 2011.

Our income tax expense was $1.5 million for the fiscal year ended June 30, 2010, as compared to an income tax benefit of $0.2 million for the fiscal year ended June 30, 2009. This was due primarily to the increased profitability in fiscal year 2010 in certain foreign jurisdictions, partially offset by $0.3 million less U.S. federal research and development credits in fiscal year 2010 as compared to 2009 and a $0.5 million valuation allowance release in fiscal year 2009.

Liquidity and Capital Resources

Our principal need for liquidity and capital resources is to maintain working capital sufficient to support our operations and to make capital expenditures to finance the growth of our business. To date, we have primarily financed our operations through funds generated from operations, borrowings under our revolving lines of credit, proceeds from our IPO, and the issuance of preferred shares.

Our IPO became effective on April 28, 2010 and closed on May 4, 2010. Approximately 5.1 million common shares were sold in our IPO at the price of $18.00 per share, including 3.4 million shares newly issued by us and approximately 1.7 million shares sold by our selling shareholders. Gross proceeds received by us from the 3.4 million shares were $61.2 million, and net proceeds were $53.3 million after deducting $4.3 million for underwriting discounts and commissions and $3.7 million for other offering related costs.

Since the completion of the IPO to June 30, 2011, we have invested all of net proceeds of $53.3 million received by us from our IPO in our in-house packaging and testing facilities, including $17.0 million paid for the acquisition of APM. We believe our in-house packaging and testing capability provides us with improved gross margin, faster time to market for our new products, and competitive advantages in proprietary packaging technology and product quality.

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In April 2010, one of our subsidiaries in China entered into a revolving line of credit arrangement with a Chinese bank to allow us to draw down, from time to time, up to 80% of the balance of the subsidiary's accounts receivable with a maximum amount of 40 million Chinese RMB (equivalent of $6.2 million as of June 30, 2011) to finance the subsidiary's accounts receivable on a maximum of 120-day repayment term. The interest rate on each drawdown varies and indexes to the published London Interbank Offered Rate per annum. There was no outstanding balance at June 30, 2011. The effective interest rate for the borrowing was 3.42% for the fiscal year ended June 30, 2011.

In December 2010, we acquired APM and assumed APM's bank borrowing liabilities. These bank borrowings were made under various line of credit agreements with local banks. The interest rate on each drawdown from these lines of credit varies and indexes to the published London Interbank Offered Rate per annum. The effective interest rate for these borrowings was 3.38% for the fiscal year ended June 30, 2011. APM's property and equipment with carrying amount of $64.0 million were pledged as collateral under one of the lines of credit. There was no outstanding balance at June 30, 2011. These lines of credit have expired as of the filing of this annual report.

The following outlines the details of each line of credit and its available credit amount as of June 30, 2011:



Line of Credit	Maturity Date	Maximum Limit in Chinese RMB	Maximum Limit ( U.S. Dollar Equivalent)		Available credit at June 30, 2011
		(in thousands)
A	July 16, 2011	105,000	$	16,250	$	16,250
B	August 16, 2011	40,000	$	6,191	$	6,191
C	July 20, 2011	30,000	$	4,643	$	4,643
D	July 31, 2011	—	$	3,000	$	3,000

We believe that our current cash and cash equivalents and cash flows from operations will be sufficient to meet our anticipated cash needs, including working capital and capital expenditures, for at least the next twelve months. In the long-term, we may require additional capital due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If our cash is insufficient to meet our needs, we may seek to raise capital through equity or debt financing. The sale of additional equity securities could result in dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and may include operating and financing covenants that would restrict our operations. We cannot assure you that financing will be available in the amounts we need or on terms acceptable to us, if at all.

Cash and cash equivalents

As of June 30, 2011 and 2010 , we had $86.7 million and $119.0 million of cash and cash equivalents, respectively. Our cash and cash equivalents primarily consist of cash on hand and short-term bank deposits with original maturities of three months or less.

The following table shows our net cash provided by operating activities, net cash used in investing activities and net cash provided by (used in) financing activities for the periods indicated:



	Year Ended June 30,
	2011				2010				2009
	(in thousands)
Net cash provided by operating activities		$	30,088			$	29,787			$	22,716
Net cash used in investing activities		(49,820		)		(14,685		)		(9,744		)
Net cash provided by (used in) financing activities		(12,667		)		43,470				3,368

Net increase (decrease) in cash and cash equivalents		$	(32,399	)		$	58,572			$	16,340

Cash flows provided operating activities

Our net cash provided by operating activities for the fiscal year ended June 30, 2011 was $30.1 million, which consisted primarily of our net income of $37.8 million. This amount was increased by depreciation and amortization expense of $16.7 million, share-based compensation expense of $6.2 million and an increase of $5.2 million in accrued liabilities. Net cash

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generated from operating activities was partially offset by a total of $2.6 million in income on equity investment in APM and gain on equity interest in APM, an increase in inventories of $26.9 million due to an increase in raw materials and wafers since the majority of our packaging and testing manufacturing process was handled in-house, and by an increase in accounts receivable of $5.2 million due to the timing of our shipments and collections.

Our net cash provided by operating activities for the fiscal year ended June 30, 2010 was $29.8 million, which consisted primarily of our net income of $37.8 million, increased by depreciation and amortization expense of $9.0 million, share-based compensation expense of $3.6 million and an increase of $5.0 million in accrued liabilities. These increases in cash flows from operating activities were partially offset by $6.5 million in income on equity investment in APM, an increase of $9.4 million in accounts receivable due to the timing of our shipments and collections, and by an increase of $5.6 million in inventories as we increased our inventory production to meet increasing demand from our customers.

Our net cash provided by from operating activities for the fiscal year ended June 30, 2009 was $22.7 million, which consisted primarily of our net loss of $0.9 million, increased by depreciation and amortization expense of $7.5 million, share-based compensation expense of $3.6 million, a decrease in accounts receivable of $8.8 million due to the timing of our shipments and collections and a decrease in inventories of $10.1 million due to our operating initiatives in managing inventory levels. These increases in cash flows from operating activities were partially offset by a decrease of $4.1 million in accrued liabilities as part of our efforts to manage spending.

Cash flows used in investing activities

Our net cash used in investing activities was $49.8 million for the fiscal year ended June 30, 2011, which was primarily attributable to $42.1 million in purchases of property and equipment mainly to expand our in-house packaging and testing production, $5.0 million deposit for acquisition of wafer fabrication assets, $1.8 million in equity investment in APM prior to the APM acquisition and $1.6 million cash used, net of cash acquired in APM acquisition.

Our net cash used in investing activities was $14.7 million for the fiscal year ended June 30, 2010, which was primarily attributable to the purchase of property and equipment of $14.0 million, the majority of which was to expand our in-house packaging and testing facility, and $0.7 million in restricted cash deposited with a bank as required under our letters of credit.

Our net cash used in investing activities for the fiscal year ended June 30, 2009 was $9.7 million, which was primarily attributable to the purchase of property and equipment of $10.1 million, offset by a $0.2 million release of the restricted cash required under our prior letters of credit with a bank.

Cash flows provided by (used in) financing activities

Our net cash used in financing activities for the fiscal year ended June 30, 2011 was $12.7 million, which was principally attributable to $15.0 million net repayments under our lines of credit, offset by $4.2 million proceeds from exercise of employee share options and from ESPP.

Our net cash provided by financing activities for the fiscal year ended June 30, 2010 was $43.5 million, which was primarily attributable to net proceeds of $53.9 million from the IPO, while we incurred approximately $0.5 million in unpaid and accrued IPO related expenses at June 30, 2010. During fiscal year 2010, we borrowed an aggregate of $3.7 million from our a line of credit and paid off in full the then outstanding balance of $13.9 million under our equipment term loan.

Our net cash provided by financing activities for the fiscal year ended June 30, 2009 was $3.4 million, which was primarily attributable to $3.9 million in net borrowings under our equipment term loan, offset by $0.3 million used to repurchase our common shares and $0.2 million in principal payments on our capital leases.

Capital expenditures

Our capital expenditures were $42.1 million, $14.0 million and $10.1 million for the fiscal years ended June 30, 2011, 2010 and 2009, respectively. Our capital expenditures principally consisted of the purchases of property and equipment. Capital expenditures for fiscal years 2011 primarily consisted of purchases of packaging and testing equipment for our two in-house manufacturing facilities and purchases of consigned equipment to a third-party foundry. Following the acquisition of APM in December 2010, we rely primarily on our in-house capacities for packaging and testing our products and expect to do so in the future. We utilize third-party foundries for wafer fabrication, and our capital expenditures related to the wafer fabrication process are primarily for the purchases of certain specialized equipment that are consigned to our third-party foundries to support our production requirement.

In August 2011, we announced our intention to exercise an option to acquire certain assets associated with the IDT's

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wafer manufacturing facility, which is located in Hillsboro, Oregon for a total purchase price of $26 million. We have obtained this option as part of the consideration for us entering into a foundry service agreement with IDT and a cash prepayment of $5.0 million which will be applied to the purchase price. The acquisition is subject to the execution of a definitive asset purchase agreement, which is expected to occur by the end of calendar year 2011. During the initial ramp-up period of the IDT facility, which is expected to last for approximately two to three quarters, we may incur additional costs and expenses relating to integration of the wafer fabrication facility, including costs for additional personnel, raw materials, equipment and other overhead expenses.

As we pursue a “fab-lite” model and continue to grow our business, we expect to increase our capital expenditures to expand our manufacturing capacity in order to reduce manufacturing cost and to provide better services to our customers.

Tabular Disclosure of Contractual Obligations

The following table provides selected information regarding our contractual obligations as of June 30, 2011:



	Payments Due by Period
				Less than									More than
	Total			1 year			1-3 years			3-5years			5 years
	(in thousands)
Capital leases		$	499		$	324		$	50		$	50		$	75
Operating leases		20,149			2,750			5,482			4,382			7,535
Capital commitments with respect to property and equipment		5,170			5,170			—			—			—
Purchase commitments with respect to inventory and research and development		22,014			22,014			—			—			—

Total contractual obligations		$	47,832		$	30,258		$	5,532		$	4,432		$	7,610

As of June 30, 2011, we had recorded liabilities of $2.7 million for uncertain tax positions and $0.4 million for potential interest and penalty, which are not included in the above table because we are unable to reliably estimate the amount of payments in individual years that would be made in connection with these uncertain tax positions.

Off-Balance Sheet Arrangements

As of June 30, 2011, we had no material off-balance sheet arrangements as defined in Regulation S-K 303(a)(4)(ii).

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. To the extent there are material differences between these estimates and actual results, our consolidated financial statements will be affected. On an ongoing basis, we evaluate the estimates, judgments and assumptions including those related to revenue recognition, inventory reserves, warranty accrual, income taxes, share-based compensation, variable interest entities and useful lives for property and equipment and for intangible assets.

Revenue recognition

We recognize revenue when there is persuasive evidence that an arrangement exists, delivery has occurred, the price to the buyer is fixed or determinable and when collectability is reasonably assured. We recognize revenue when product is shipped to the customer, net of estimated stock rotation returns and price adjustments to certain distributors.

We sell our products primarily to distributors, who in turn sell our products globally to various end customers. Our revenue is net of the effect of the estimated stock rotation returns and price adjustments that we expect to provide to certain

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distributors. Stock rotation returns are governed by contract and are limited to a specified percentage of the monetary value of the products purchased by distributors during a specified period. We estimate provision for stock rotation returns based on historical returns and individual distributor agreements. We also provide special pricing to certain distributors primarily based on volume, to encourage resale of our products. We estimate the expected price adjustments at the time the revenue is recognized based on distributor inventory levels, pre-approved future distributor selling prices, distributor margins and demand for our products. If actual stock rotation returns or price adjustments differ from our estimates, adjustments may be recorded in the period when such actual information is known. Allowance for price adjustments is recorded as contra accounts receivable and provision for stock rotation is recorded in accrued liabilities in the consolidated balance sheets.

Revenue from certain distributors is deferred until the distributor resells the products to end customers due to price protection adjustments and right of returns that cannot be reliably measured.

Packaging and testing services revenue is recognized upon shipment of serviced products to the customer.

Inventory reserves

We carry inventories at the lower of cost (determined on a first-in, first-out basis) or market. Cost primarily consists of semiconductor wafers, packaging and testing, personnel, including share-based compensation expense, overhead attributable to manufacturing, operations and procurement, yield improvements, capacity utilization. Inventory reserves are made based on our periodic review of inventory quantities on hand as compared with our sales forecasts, historical usage, aging of inventories, production yield levels and current product selling prices. If actual market conditions are less favorable than those forecasted by us, additional future inventory write-downs may be required that could adversely affect our operating results. Inventory reserves once established are not reversed until the related inventory has been sold or scrapped. If actual market conditions are more favorable than expected and the products that have previously been written down are sold, our gross margin would be favorably impacted.

Warranty accrual

We provide a standard one-year warranty for the products we sell. We accrue for estimated warranty costs at the time revenue is recognized. Our warranty obligation is affected by product failure rates, the cost of replacement product, freight costs for failed parts and their replacement and other quality assurance costs. We monitor our product returns for warranty claims and maintain an accrual for the related warranty cost based on our historical data and anticipated warranty claims known at the time that the estimate is made. If actual warranty costs differ significantly from our estimates, revisions to the estimated warranty accrual would be required and any such adjustments could be material.

Accounting for income taxes

We are subject to income taxes in a number of jurisdictions. We must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of tax credits, benefits and deductions, and in the calculation of certain tax assets and liabilities which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes, as well as interest and penalties related to uncertain tax positions. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. We establish accruals for certain tax contingencies based on estimates of whether additional taxes may be due. While the final tax outcome of these matters may differ from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. As a result, significant changes to these estimates may result in an increase or decrease to our tax provision in a subsequent period.

Significant management judgment is also required in determining whether deferred tax assets will be realized in full or in part. When it is more likely than not that all or some portion of specific deferred tax assets such as net operating losses or foreign tax credit carryforwards will not be realized, a valuation allowance must be established for the amount of the deferred tax assets that cannot be realized. We consider all available positive and negative evidence on a jurisdiction-by-jurisdiction basis when assessing whether it is more likely than not that deferred tax assets are recoverable. We consider evidence such as our past operating results, the existence of cumulative losses in recent years and our forecast of future taxable income. We intend to maintain a partial valuation allowance equal to the state research and development credit carryfowards until sufficient

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positive evidence exists to support reversal of the valuation allowance.

We have not provided for withholding taxes on the undistributed earnings of our foreign subsidiaries because we intend to reinvest such earnings indefinitely. As of June 30, 2011 the cumulative amount of undistributed earnings considered permanently reinvested is $22,000,000. The determination of the unrecognized deferred tax liability on these earnings is not practicable. Should we decide to remit this income to the Bermuda parent company in a future period, our provision for income taxes may increase materially in that period.

In July 2006, the Financial Accounting Standards Board, or FASB, issued guidance which clarifies the accounting for income taxes by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. The minimum threshold is defined as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely to be realized upon ultimate settlement. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax law and regulations in a multitude of jurisdictions. Although the guidance on the accounting for uncertainty in income taxes prescribes the use of a recognition and measurement model, the determination of whether an uncertain tax position has met those thresholds will continue to require significant judgment by management. If the ultimate resolution of tax uncertainties is different from what is currently estimated, a material impact on income tax expense could result.

Our provision for income taxes is subject to volatility and could be adversely impacted by changes in earnings or tax laws and regulations in various jurisdictions. We are subject to the continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from these continuous examinations will not have an adverse effect on our operating results and financial condition. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of changes to reserves, as well as the related net interest and penalties.

Share-based compensation expense

We recognize share-based compensation expense based on the estimated fair value of the options determined by the Black-Scholes option pricing model, using the accelerated vesting attribution method. Share-based compensation expense is significant to the consolidated financial statements and is calculated using our best estimates, which involve inherent uncertainties and the application of management's judgment. Significant estimates include fair value of the underlying common shares prior to our IPO, expected term, share price volatility and forfeiture rates.

We established the expected term based on the historical data of similar entities' data as adjusted for expected changes in future exercise patterns. We estimate forfeiture rates based on historical average period of time that options were outstanding and forfeited. We estimate expected volatility based on the volatility of similar entities whose shares are publicly available. The risk-free interest rate is based on the U.S. Treasury yields at the time of grant for periods corresponding to the expected term of the options. The expected dividend yield is zero based on the fact that we have not historically paid dividends and have no current intention to pay dividends.

Prior to our IPO which became effective on April 28, 2010, the absence of a public market for our common shares required our compensation committee of the board of directors, the members of which we believe have extensive business, industry, finance and venture capital experience, to estimate the fair value of our common shares for the purpose of granting options and for determining share-based compensation expense for the periods presented. In response to these requirements, the compensation committee, with input from management, estimated the fair value of the common shares at each meeting when options were granted. We commissioned an independent third-party to conduct contemporaneous valuations to assist in the determination of the fair value of the common shares, except for the grant of options on March 1, 2010, the exercise price of which was determined after considering a preliminary valuation analysis provided to us by the representatives of our underwriters, the valuation of the common shares performed by an independent third-party at December 31, 2009 and other factors.

Our contemporaneous valuations, using the AICPA Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation , employed a two step process to arrive at an estimate of the value of the common shares. The first step of the analysis was to estimate the total enterprise value. We primarily relied on an income approach, specifically a discounted cash flow analysis, to estimate the total enterprise value. The discounted cash flow analysis involves applying appropriate risk-adjusted discount rates to estimated cash flows, based on forecasted revenue and costs. The assumptions used in connection

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with these valuations were based on our expected operating performance over the discrete forecast period. A terminal value was estimated for the value of the business beyond the discrete forecasted earnings period. This value was estimated by applying a multiple to our projections in the final year of the forecast period. The multiple was selected based on the data of a peer group of public companies in the industry. The discrete period cash flows and terminal value were then discounted to the present at our estimated cost of capital, which was developed through an analysis of required returns for companies in a similar stage of development. The results of the income approach were tested for reasonableness based on an analysis of the multiples of similar public companies.

The second step was to allocate our total enterprise value to the preferred and common classes of securities based on the relative rights and preferences of each class. We relied on the option pricing method, which treats the securities as call options on the underlying assets (or enterprise value) to allocate the enterprise value. Significant estimates required in the option pricing method include the expected time to liquidity, risk-free interest rate for the expected time to liquidity, expected dividend yield, fair value of the aggregate enterprise value and expected volatility of the underlying enterprise value.

Additionally, we considered a probability-weighted expected return method to estimate the value of the common shares. This methodology considers various scenarios of future exit events, including a public offering, sale, liquidation or remaining private. An estimate of future exit periods and events are made and the exit values are allocated to each class of security based on the rights and preferences that would be exercised to maximize the value of each class, based on seniority. The allocated values are then discounted to the present and weighted based on an assessment of the probability of each scenario. Probabilities of each scenario have been assessed by management at each date, based on consideration of then-current market conditions and changes in the underlying prospects.

We also reviewed a variety of factors in determining the deemed fair value of the common shares such as our operating and financial performance, the introduction of new products, the price of the preferred share financings with third-party investors in arm's length transactions, the lack of a public market for its common shares, industry growth and volume, the performance of similarly situated companies in our industry and stock market indices, emerging trends and issues, trends in consumer confidence and spending, overall economic indicators and the general economic outlook.

Variable Interest Entities and Investment in APM

We evaluate all transactions and relationships with potential variable interest entities (VIEs) to determine whether we are the primary beneficiary of the entities, therefore is required to consolidate with VIEs. Our overall methodology for evaluating transactions and relationships under the VIE requirements includes the following two steps:


•	determine whether the entity meets the criteria to qualify as a VIE; and


•	determine whether we are the primary beneficiary of the VIE.

In performing the first step, we consider the significant factors and judgments in making the determination as to whether an entity is a VIE include:


•	the design of the entity, including the nature of its risks and the purpose for which the entity was created, to determine the variability that the entity was designed to create and distribute to its interest holders;


•	the nature of our involvement with the entity;


•	whether control of the entity may be achieved through arrangements that do not involve voting equity;


•	whether there is sufficient equity investment at risk to finance the activities of the entity; and


•	whether parties other than the equity holders have the obligation to absorb expected losses or the right to receive residual returns.

For each VIE identified, we then perform the second step and evaluate whether we are the primary beneficiary of the VIE by considering the following significant factors and judgments:


•	whether our variable interest absorbs the majority of the VIE's expected losses;


•	whether our variable interest receives the majority of the VIE's expected returns; and


•	whether we have the ability to make decisions that significantly affect the VIE's results and activities.

Based on our evaluation of the above factors and judgments, no VIEs were identified as of June 30, 2011. Prior to the APM acquisition on December 3, 2010, we had a 43% equity interest in APM which had been identified as a VIE; however, we were not the primary beneficiary and therefore we did not consolidate APM. The equity interest in APM was accounted for

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using the equity method through the date of acquisition.

Estimated Useful Lives for Property and Equipment and Intangible Assets

Property and equipment are recorded at cost and are depreciated using the straight-line method over estimated useful lives of the assets. Patents and exclusive technology rights purchased from third parties are amortized on a straight-line basis over their estimated useful lives of three to seven years. Identified intangibles acquired in a business combination are recognized at fair value at the acquisition date and amortized on a straight-line basis over their estimated economic lives of three to four years. Prior to December 3, 2010, the APM acquisition date, the Company's manufacturing machinery and equipment were depreciated over a useful life of 5 years. Upon the completion of the APM acquisition, the Company revised the estimated useful life of its manufacturing machinery and equipment for depreciation purposes from 5 years to 8 years on a prospective basis.

Recently Issued Accounting Pronouncements

In June 2011, the FASB issued new accounting guidance on the presentation of comprehensive income. The new guidance requires the presentation of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The new guidance also requires presentation of adjustments for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. We are required to adopt this guidance as of the beginning of 2013. The adoption of this guidance will only impact the presentation of our consolidated financial statements.

In December 2010, the FASB issued an amendment to the disclosure of supplementary pro forma information for business combinations. This amendment clarifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendment also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendment is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. We have adopted the disclosure requirements for business combinations in our fiscal year 2011.

Effective January 1, 2010, we adopted certain provisions of the FASB's updated guidance related to fair value measurements and disclosures, which require new disclosures about significant transfers in and out of Levels 1 and 2 fair value measurements and separate disclosures about purchases, sales, issuances and settlements relating to Level 3 fair value measurements. The updated guidance also clarifies existing disclosure requirements regarding inputs and valuation techniques, as well as the level of disaggregation for each class of assets and liabilities for which separate fair value measurements should be disclosed. The guidance was effective January 1, 2010, except for the separate disclosures about purchases, sales, issuances and settlements relating to Level 3 measurements, which are effective for our financial statements beginning in the first quarter of fiscal year 2012. The adoption of the updated guidance did not have an impact on our consolidated financial statements and the deferred provisions are not expected to significantly impact our consolidated financial statements.

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Item 7A.	Quantitative and Qualitative Disclosures About Market Risk

Foreign currency risk

We and our principal subsidiaries use U.S. dollars as our functional currency because most of the transactions are conducted and settled in U.S. dollars. All of our revenue and a significant portion of our operating expenses are denominated in U.S. dollars. The functional currency for our in-house packaging and testing facilities in China is U.S. dollars and a significant majority of our capital expenditures are denominated in U.S. dollars. However, foreign currencies are required to fund our overseas operations, primarily in Taiwan and China. Operating expenses of overseas operations are denominated in their respective local currencies. In order to minimize exposure to foreign currencies, we maintained cash and cash equivalent balances in foreign currencies, including Chinese Yuan (“RMB”) as operating funds for our foreign operating expenses. Our management believes that our exposure to foreign currency translation risk is not significant based on a 10% sensitivity analysis in foreign currencies due to the net assets denominated in foreign currencies pertaining to foreign operations, principally in Taiwan and China, are not significant to our consolidated net assets.

Interest rate risk

Our interest-bearing assets comprise mainly interest-bearing short-term bank balances. We manage our interest rate risk by placing such balances in instruments with various short-term maturities. Borrowings expose us to interest rate risk. Borrowings are drawn down after due consideration of market conditions and expectation of future interest rate movements. In the past, our borrowings have been subject to floating interest rates, and future borrowings may expose us to cash-flow interest rate risk. We do not believe that a 10% change in interest rates would materially affect our results of operations as we had no outstanding borrowings at June 30, 2011.


Item 8.	Financial Statements and Supplementary Data

See Part IV, Item 15 "Exhibits and Financial Statement Schedules" for our consolidated financial statements and the notes and schedules thereto filed as part of this annual report.

Supplementary Data: Selected Consolidated Quarterly Data

The following tables present our unaudited consolidated statements of income data for each of the eight quarters in the period ended June 30, 2011 . Net income per share for the four quarters of each fiscal year may not sum to the total for the fiscal year because of difference in number of shares outstanding during each period. The operating results for any quarter should not be relied upon as necessarily indicative of results for any future period. We expect our quarterly operating results to fluctuate in future periods due to a variety of reasons, including those discussed in Item 1A. “Risk Factors.”



	Quarter Ended
	September 30, 2010		December 31, 2010		March 31, 2011		June 30, 2011
	(1)		(1)		(1)
	(in thousands, except per share data)
Revenue	$	89,417	$	83,982	$	91,074	$	96,835
Gross profit	24,145		23,196		28,441		29,439
Operating income	8,688		7,547		11,338		10,241
Net income	$	8,800	$	8,691	$	10,654	$	9,682
Net income per share
Basic	$	0.40	$	0.38	$	0.44	$	0.39
Diluted	$	0.37	$	0.36	$	0.41	$	0.37

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	Quarter Ended
	September 30, 2009		December 31, 2009		March 31, 2010		June 30, 2010
	(in thousands, except per share data)
Revenue	$	74,717	$	63,982	$	77,672	$	85,469
Gross profit	18,595		17,728		20,633		23,235
Operating income	8,879		6,145		9,045		8,856
Net income	$	8,888	$	9,589	$	9,665	$	9,682
Net income per share attributable to common shareholders
Basic	$	0.99	$	1.08	$	1.08	$	0.50
Diluted	$	0.45	$	0.48	$	0.47	$	0.40

(1) We formerly prepared our consolidated financial statements under IFRS and furnished our IFRS quarterly financial statements for these quarters on Form 6-Ks. Pursuant to the SEC requirements, we assessed our ownership structure as of December 31, 2010 and determined that we no longer qualified as a foreign private issuer. As a result, beginning on July 1, 2011, we are required to report our financial statements under U.S. GAAP and file our annual report on Form 10-K, as well as to comply with additional SEC reporting obligations as a domestic issuer. Accordingly, we have converted our consolidated financial statements from IFRS to U.S. GAAP. See "Item 6. Selected Consolidated Financial Data" for a discussion of relevant differences of individual items in the financial statements between IFRS and U.S. GAAP.


Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.


Item 9A.	Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of June 30, 2011 have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Management's Annual Report on Internal Control over Financial Reporting

Our management, including our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f) and Rule 15d-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Our management, including our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of June 30, 2011. In performing this assessment, management used the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control- Integrated Framework . Based upon this assessment, our management has concluded that, as of June 30, 2011, our internal control over financial reporting was effective.

We excluded Agape Package Manufacturing Ltd., or APM from our assessment of the effectiveness of our internal control over financial reporting as of June 30, 2011 because it was acquired by us in a purchase business combination on December 3,

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2010. APM, our wholly-owned subsidiary, constituted 27% of total assets and 4% of total revenue of the related amounts reported in our consolidated financial statements as of and for the year ended June 30, 2011.

The effectiveness of the Company's internal control over financial reporting as of June 30, 2011 has been audited by PricewaterhouseCoopers LLP, our independent registered public accounting firm, as stated in their report, included elsewhere herein.

Limitation on the Effectiveness of Controls

While our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance that their respective objectives will be met, we do not expect that our disclosure controls and procedures or our internal control over financial reporting are or will be capable of preventing or detecting all errors and all fraud. Any control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2011 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.


Item 9B.	Other Information

None

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PART III

Certain information required by Part III is omitted from this report on Form 10-K since we intend to file our definitive proxy statement for our next annual meeting of shareholders, pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended (the “2011 Proxy Statement”), no later than 120 days after the end of fiscal year 2011, and certain information to be included in the 2011 Proxy Statement is incorporated herein by reference.


Item 10.	Directors, Executive Officers and Corporate Governance

The information required by this item concerning our directors, executive officers, Section 16 compliance and corporate governance matters is incorporated by reference to the information set forth in the sections titled “Election of Directors,” “Management,” and “Section 16(a) Beneficial Ownership Reporting Compliance” in our 2011 Proxy Statement.


Item 11.	Executive Compensation

The information required by this item regarding executive compensation is incorporated by reference from the information set forth under the captions “Compensation of Non-Employee Directors” and “Executive Compensation,” in our 2011 Proxy Statement.


Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters

The information required by this item regarding security ownership of certain beneficial owners and management is incorporated by reference to the information set forth in the section titled “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plans” in our 2011 Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item regarding related party transactions and director independence is incorporated by reference from the information set forth under the captions “Corporate Governance and Board of Directors - Director Independence” and “Related Person Transactions and Section 16(a) Beneficial Ownership Reporting Compliance,” in our 2011 Proxy Statement.


Item 14.	Principal Accountant Fees and Services

The information required by this item regarding principal accountant fees and services is incorporated by reference from the information set forth under the caption “Proposal 2 - Ratification of Appointment of Independent Registered Public Accounting Firm,” in our 2011 Proxy Statement.

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PART IV


Item 15.	Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this annual report:

(1) Consolidated Financial Statements. The index to the consolidated financial statements is below.



Item	Page
Report of Independent Registered Public Accounting Firm	54
Consolidated Balance Sheets	55
Consolidated Statements of Income (Loss)	56
Consolidated Statements of Shareholders' Equity and Comprehensive Income (Loss)	57
Consolidated Statements of Cash Flows	58
Notes to the Consolidated Financial Statements	60

(2) Financial Statement Schedules.



Schedule I - Condensed Financial Information of Registrant	84
Schedule II - Valuation and Qualifying accounts	88

(3) Exhibits

The exhibits listed on the accompanying index to exhibits in Item 15(b) below are filed as part of, or hereby incorporated by reference into, this annual report on Form 10-K.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

Alpha and Omega Semiconductor Limited

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income (loss), shareholders' equity and comprehensive income (loss) and cash flows present fairly, in all material respects, the financial position of Alpha and Omega Semiconductor Limited and its subsidiaries at June 30, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2011 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules listed in the index appearing under Item 15(a)(2), present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2011, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements and financial statement schedules, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Annual Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements, on the financial statement schedules, and on the Company's internal control over financial reporting based on our audits (which was an integrated audit in 2011). We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As described in Management's Annual Report on Internal Control Over Financial Reporting, management has excluded Agape Package Manufacturing Ltd. from its assessment of internal control over financial reporting as of June 30, 2011 because it was acquired by the Company in a purchase business combination during the year ended June 30, 2011. We have also excluded Agape Package Manufacturing Ltd. from our audit of internal control over financial reporting. Agape Package Manufacturing Ltd. is a wholly-owned subsidiary whose total assets and total revenues represent 27% and 4%, respectively, of the related consolidated financial statement amounts as of and for the year ended June 30, 2011.

/s/ PricewaterhouseCoopers LLP

San Jose, California

September 9, 2011

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

CONSOLIDATED BALANCE SHEETS

(in thousands)



	June 30,
	2011				2010
ASSETS
Current assets:
Cash and cash equivalents	$	86,708			$	119,001
Restricted cash	54				707
Accounts receivable, net	42,503				30,759
Inventories	65,251				27,800
Deferred tax assets	1,773				753
Other current assets	5,056				3,051
Total current assets	201,345				182,071
Investment in APM	—				26,069
Property and equipment, net	127,839				47,367
Intangible assets, net	1,599				616
Deferred tax assets	9,048				2,075
Other long-term assets	7,607				458
Total assets	$	347,438			$	258,656

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Borrowings	$	—			$	3,680
Accounts payable	64,678				37,930
Account payable to APM	—				10,100
Accrued liabilities	15,123				11,265
Income taxes payable	2,377				1,098
Deferred margin	495				245
Capital leases - current portion	306				571
Total current liabilities	82,979				64,889
Income taxes payable - long term	3,081				3,189
Deferred income tax liabilities	25				25
Capital leases - long term portion	130				436
Deferred rent	973				671
Total liabilities	87,188				69,210
Commitments and contingencies (Note 14)
Shareholders' equity:
Preferred shares, par value $0.002 per share:
Authorized: 10,000 shares; Issued and outstanding: none at June 30, 2011 and 2010	—				—
Common shares, par value $0.002 per share:
Authorized: 50,000 shares; Issued and outstanding: 24,612 shares and 24,562 shares at June 30, 2011 and 22,101 shares and 22,101 shares at June 30, 2010	49				44
Treasury shares at cost; 50 shares at June 30, 2011 and none at June 30, 2010	(693		)	—	—
Additional paid-in capital	153,004				119,674
Deferred share-based compensation	—				(22		)
Accumulated other comprehensive income	934				621
Retained earnings	106,956				69,129
Total shareholders’ equity	260,250				189,446
Total liabilities and shareholders’ equity	$	347,438			$	258,656

The accompanying notes are an integral part of these consolidated financial statements.

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in thousands, except per share data)



	Fiscal Year Ended June 30,
	2011			2010			2009
Revenue	$	361,308		$	301,840		$	185,076
Cost of goods sold	256,087			221,649			146,510
Gross profit	105,221			80,191			38,566

Operating expenses:
Research and development	29,470			20,943			19,273
Selling, general and administrative	37,937			26,323			20,443
Total operating expenses	67,407			47,266			39,716
Operating income (loss)	37,814			32,925			(1,150		)

Interest income	280			39			648
Interest expense	(263		)	(189		)	(587		)
Income (loss) on equity investment in APM	1,768			6,546			(4		)
Gain on equity interest in APM	837			—			—
Income (loss) before income taxes	40,436			39,321			(1,093		)

Income tax expense (benefit)	2,609			1,497			(192		)
Net income (loss)	$	37,827		$	37,824		$	(901	)

Net income (loss) attributable to common shareholders
Basic	$	37,827		$	34,371		$	(901	)
Diluted	$	37,827		$	37,824		$	(901	)

Net income (loss) per share attributable to common shareholders
Basic per share	$	1.61		$	3.24		$	(0.11	)
Diluted per share	$	1.51		$	1.78		$	(0.11	)

Weighted-average number of shares used in computing net income (loss)
per share attributable to common shareholders
Basic shares	23,495			10,594			7,914
Diluted shares	24,989			21,192			7,914

The accompanying notes are an integral part of these consolidated financial statements.

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ALPHA AND OMEGA SEMICONDUCTOR LIMITED

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND

COMPREHENSIVE INCOME (LOSS)

(in thousands)



	Convertible Preferred Shares					Common Shares				Treasury Shares					Additional Paid-In Capital			Deferred Share-Based Compensation			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total Shareholders' Equity			Total Comprehensive Income (Loss)
	Shares		Amount			Shares		Amount		Shares		Amount
	Shares		Amount			Shares		Amount		Shares		Amount
Balance, June 30, 2008	10,712		21			7,916		$	16	—		$	—		$	60,037		$	(611	)	$	688		$	31,994		$	92,145
Exercise of common share options	—		—			35		—		—		—			51			—			—			—			51
Share-based compensation expense	—		—			—		—		—		—			3,194			390			—			—			3,584
Repurchase of common shares	—		—			(32	)	—		—		—			(300		)	—			—			—			(300		)
Net loss	—		—			—		—		—		—			—			—			—			(901		)	(901		)	$	(901	)
Cumulative translation adjustment	—		—			—		—		—		—			—			—			(79		)	—			(79		)	(79		)
Balance, June 30, 2009	10,712		21			7,919		16		—		—			62,982			(221		)	609			31,093			94,500			(980		)
Exercise of common share options	—		—			70		—		—		—			172			—			—			—			172
Share-based compensation expense	—		—			—		—		—		—			3,360			199			—			—			3,559
Proceeds from initial public offering, net of issuance costs	—		—			3,400		7		—		—			53,372			—			—			—			53,379
Conversion of preferred shares upon the initial public offering	(10,712	)	(21		)	10,712		21		—		—			(212		)	—			—			212			—
Net income	—		—			—		—		—		—			—			—			—			37,824			37,824			37,824
Cumulative translation adjustment	—		—			—		—		—		—			—			—			12			—			12			12
Balance, June 30, 2010	—		—			22,101		44		—		—			119,674			(22		)	621			69,129			189,446			37,836
Initial public offering issuance costs	—		—			—		—		—		—			(117		)	—			—			—			(117		)
Exercise of common share options	—		—			586		1		—		—			2,621			—			—			—			2,622
Issuance of shares for Employee Stock Purchase Plan	—		—			159		—		—		—			1,612			—			—			—			1,612
Issuance of shares for APM acquisition	—		—			1,766		4		—		—			23,062			—			—			—			23,066
Repurchase of common shares under shares repurchase program	—		—			—		—		(50	)	(693		)	—			—			—			—			(693		)
Share-based compensation expense	—		—			—		—		—		—			6,152			22			—			—			6,174
Net income	—		—			—		—		—		—			—			—			—			37,827			37,827			37,827
Cumulative translation adjustment	—		—			—		—		—		—			—			—			313			—			313			313
Balance, June 30, 2011	—		$	—		24,612		$	49	(50	)	$	(693	)	$	153,004		$	—		$	934		$	106,956		$	260,250		$	38,140

The accompanying notes are an integral part of these consolidated financial statements.

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ALPHA AND OMEGA SEMICONDUCTOR LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



	Fiscal Year Ended
	June 30,
	2011			2010				2009
Cash flows from operating activities
Net income (loss)	$	37,827		$	37,824			$	(901	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation	16,261			8,769				7,261
Amortization	417			242				267
Share-based compensation expense	6,174			3,559				3,584
(Income) loss on equity investment in APM	(1,768		)	(6,546		)		4
Gain on equity interest in APM	(837		)	—				—
Loss (gain) on disposal of property and equipment	3			40				(19		)
Changes in working capital, net of impact of acquisition:
Inventories	(26,941		)	(5,600		)		10,065
Accounts receivable	(5,195		)	(9,359		)		8,813
Other current and long term assets	(973		)	(1,283		)		(406		)
Deferred tax assets and liabilities	(246		)	(1,166		)		(867		)
Accounts payable	(1,262		)	(3,763		)		(1,094		)
Account payable to APM	1,277			819				535
Income taxes payable	196			1,229				(409		)
Accrued and other liabilities	5,155			5,022				(4,117		)
Net cash provided by operating activities	$	30,088		$	29,787		—	$	22,716

Cash flows from investing activities
Acquisition of APM	(1,569		)	—				—
Prepayment for acquisition of wafer fabrication assets	(5,000		)	—				—
Purchase of property and equipment	(42,073		)	(13,980		)		(10,072		)
Proceeds from sale of property and equipment	—			2				168
Restricted cash released (placed)	653			(707		)		200
Additional investment in APM before the APM acquisition	(1,831		)	—				(40		)
Net cash used in investing activities	$	(49,820	)	$	(14,685	)		$	(9,744	)

Cash flows from financing activities
Net proceeds from (payments of issuance costs for) the IPO	(610		)	53,872				—
Proceeds from exercise of share options	2,622			172				51
Proceeds from employee stock purchase plan	1,612			—				—
Payment for repurchase of common shares	(693		)	—				(300		)
Proceeds from borrowings	23,461			3,680				6,000
Repayments of borrowings	(38,488		)	(13,856		)		(2,144		)
Principal payments on capital leases	(571		)	(398		)		(239		)
Net cash provided by (used in) financing activities	$	(12,667	)	$	43,470			$	3,368

Net increase (decrease) in cash and cash equivalents	(32,399		)	58,572				16,340
Cash and cash equivalents at beginning of period	119,001			60,416				44,095
Exchange gains (losses) on cash and cash equivalents	106			13				(19		)
Cash and cash equivalents at end of period	$	86,708		$	119,001			$	60,416

Supplemental disclosures of cash flow information:

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ALPHA AND OMEGA SEMICONDUCTOR LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



Cash paid for interest	$	263	$	188	$	587
Cash paid for income taxes	$	2,543	$	1,512	$	1,127

Supplemental disclosures of non cash investing and financing information:
Increase (decrease) of property and equipment purchased within accounts payable and accrued liabilities	$	5,824	$	9,680	$	(1,337	)
Capitalized IPO costs included in accrued liabilities	$	—	$	493	$	—
Issuance of common shares for the APM acquisition	$	23,066	$	—	$	—

The accompanying notes are an integral part of these consolidated financial statements.

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ALPHA AND OMEGA SEMICONDUCTOR LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Alpha and Omega Semiconductor Limited and its subsidiaries (the "Company", "AOS", "we" or "us") design, develop and supply a broad range of analog semiconductors, specializing in power semiconductors. The Company conducts its operations primarily in the United States of America (“U.S.”), Hong Kong, Macau, China, Taiwan, Korea and Japan. On December 3, 2010, the Company acquired control of Agape Package Manufacturing Ltd. (“APM”) in a cash and stock transaction for a purchase price of $40,045,000. The Company held a 43% equity interest in APM prior to the acquisition, which was accounted for under the equity method of accounting. After the acquisition, APM became a wholly-owned subsidiary of the Company.

Basis of Preparation

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP").

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after elimination of inter-company balances and transactions.

Use of Estimates

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses. To the extent there are material differences between these estimates and actual results, the Company's consolidated financial statements will be affected. On an ongoing basis, the Company evaluates the estimates, judgments and assumptions including those related to revenue recognition, inventory reserves, warranty accrual, income taxes, share-based compensation, variable interest entities and useful lives for property and equipment and intangible assets.

Foreign Currency Transactions and Translation

Most of the Company's principal subsidiaries use U.S. dollars as their functional currency because their transactions are primarily conducted and settled in U.S. dollars. All of their revenue and a significant portion of their operating expenses are denominated in U.S. dollars. The functional currencies for the Company's in-house packaging and testing facilities in China are U.S. dollars, and a significant majority of their capital expenditures are denominated in U.S. dollars. Foreign currency transactions are translated into the functional currencies using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses, resulting from the settlement of such transactions and from the remeasurement of monetary assets and liabilities denominated in foreign currencies using exchange rates at balance sheet date and non monetary assets and liabilities using historical exchange rates, are recognized in the statements of income (loss).

For the Company's subsidiaries which use the local currency as their functional currency, their results and financial position are translated into U.S. dollars using exchange rates at balance sheet dates for assets and liabilities and using average exchange rates for income and expenses items. The resulting translation differences are presented as a separate component of accumulated other comprehensive income (loss) in shareholders' equity.

Cash and Cash Equivalents

Cash equivalents are highly liquid investments with stated maturities of three months or less as of the dates of purchase. The carrying amounts reported for cash and cash equivalents are considered to approximate fair values based upon their short maturities.

Accounts Receivable

The allowance for doubtful accounts is based on assessment of the collectibility of accounts receivable from customers.

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The Company reviews the allowance by considering factors such as historical collection experience, credit quality, age of the accounts receivable balances and current economic conditions that may affect a customer's ability to pay.

Inventories

The Company carries inventories at the lower of cost (determined on a first-in, first-out basis) or market value. Cost includes semiconductor wafer and raw materials, labor, depreciation expenses and other manufacturing expenses and overhead, and packaging and testing fees paid to third parties if subcontractors are used. Inventory reserves are made based on the Company's periodic review of inventory quantities on hand as compared with its sales forecasts, historical usage, aging of inventories, production yield levels and current product selling prices. If actual market conditions are less favorable than those forecasted by management, additional future inventory write-downs may be required that could adversely affect the Company's operating results. Inventory reserves once established are not reversed until the related inventory has been sold or scrapped. If actual market conditions are more favorable than expected and the products that have previously been written down are sold, the Company's gross margin would be favorably impacted.

Variable Interest Entities and Investment in APM

The Company is required to evaluate all transactions and relationships with potential variable interest entities (VIEs) to determine whether it is the primary beneficiary of the entities, and therefore is required to consolidate the VIEs. The Company's overall methodology for evaluating transactions and relationships under the VIE requirements includes the following two steps:


•	determine whether the entity meets the criteria to qualify as a VIE; and


•	determine whether the Company is the primary beneficiary of the VIE.

In performing the first step, the significant factors and judgments that the Company considers in making the determination as to whether an entity is a VIE include:


•	the design of the entity, including the nature of risks and the purpose for which the entity was created, to determine the variability that the entity was designed to create and distribute to its interest holders;


•	the nature of the Company's involvement with the entity;


•	whether control of the entity may be achieved through arrangements that do not involve voting equity;


•	whether there is sufficient equity investment at risk to finance the activities of the entity; and


•	whether parties other than the equity holders have the obligation to absorb expected losses or the right to receive residual returns.

For each VIE identified, the Company then performs the second step and evaluate whether it is the primary beneficiary of the VIE by considering the following significant factors and judgments:


•	whether the Company's variable interest absorbs the majority of the VIE's expected losses;


•	whether the Company's variable interest receives the majority of the VIE's expected returns; and


•	whether the Company has the ability to make decisions that significantly affect the VIE's results and activities.

Based on the Company's evaluation of the above factors and judgments, no VIEs were identified as of June 30, 2011. Prior to the APM acquisition on December 3, 2010, the Company held 43% equity interest in APM which had been identified as a VIE; however, the Company was not the primary beneficiary and therefore was not required to consolidate APM. The equity interest in APM was accounted for using the equity method of accounting through the date of acquisition.

Property and Equipment

Property and equipment are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items and the costs incurred to make the assets ready for their intended use.

Depreciation is calculated using the straight-line method over the estimated useful lives as follows:

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Manufacturing machinery and equipment		8 years
Equipment and tooling		5 years
Computer equipment and software		3 years
Office furniture and equipment		5 years
Leasehold improvements		2 years to 15 years based on shorter of expected economic useful life or the lease term

Equipment and construction in progress represent equipment received but necessary installation has not been performed or leasehold improvements have been started but not yet completed. Equipment and construction in progress are stated at cost and transferred to respective asset class when fully completed and ready for their intended use.

Internal use software development costs are capitalized to the extent that the costs are directly associated with the development of identifiable and unique software products controlled by the Company that will probably generate economic benefits beyond one year. Costs incurred during the application development stage are required to be capitalized. The application development stage is characterized by software design and configuration activities, coding, testing and installation. Training costs and maintenance are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality. Costs included employee costs incurred to develop the software and implementation fees paid to outside consultants. Internal developed computer software are amortized over its estimated useful lives of five years starting from the date when it is ready for its intended use. Capitalized costs are included within property and equipment.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized as selling, general and administrative expenses in the statements of income (loss). Costs of maintenance and repairs that do not improve or extend the lives of the respective assets are expensed as incurred.

During the fiscal year ended June 30, 2011, after performing a review and assessment of the useful life of its manufacturing machinery and equipment, the Company revised the estimated useful life of its manufacturing machinery and equipment for depreciation purposes from 5 years to 8 years beginning December 1, 2010 on a prospective basis. The effect of this change was to decrease depreciation expense related to cost of good sold by approximately $5.1 million, increase net income by approximately $3.9 million, net of a tax effect of $1.2 million, and increase basic net income per share by approximately $0.17 and diluted net income per share by $0.16 for the fiscal year ended June 30, 2011.

Intangible Assets

Patents and exclusive technology rights purchased from third parties are amortized on a straight-line basis over their estimated useful lives of three to seven years.

Intangible assets acquired in a business combination are recognized at fair value at the acquisition date and amortized on a straight-line basis over their estimated economic lives of three to four years.

Impairment of Long-Lived Assets

Long-lived assets or asset groups are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset might not be recoverable. Factors that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable. Where such factors indicate potential impairment, the recoverability of an asset or asset group is assessed by determining if the carrying value of the asset or asset group exceeds the sum of the projected undiscounted cash flows expected to result from the use and eventual disposition of the assets over the remaining economic life. The impairment loss is measured based on the difference between the carrying amount and estimated fair value.

Revenue Recognition

The Company recognizes revenue when there is persuasive evidence that an arrangement exists, delivery has occurred, the price to the buyer is fixed or determinable and when collectability is reasonably assured. The Company recognizes revenue when product is shipped to the customer, net of estimated stock rotation returns and price adjustments that it expects to provide to certain distributors.

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The Company sells its products primarily to distributors, who in turn sell the products globally to various end customers. The Company allows stock rotation returns from certain distributors. Stock rotation returns are governed by contract and are limited to a specified percentage of the monetary value of products purchased by distributors during a specified period. The Company records an allowance for stock rotation returns based on historical returns and individual distributor agreements. The Company also provides special pricing to certain distributors, primarily based on volume, to encourage resale of the Company's products. The Company estimates the expected price adjustments at the time revenue is recognized based on distributor inventory levels, pre-approved future distributor selling prices, distributor margins and demand for its products. If actual stock rotation returns or price adjustments differ from its estimates, adjustments may be recorded in the period when such actual information is known. Allowance for price adjustments is recorded as contra accounts receivable and the provision for stock rotation rights is recorded in accrued liabilities in the consolidated balance sheets.

Revenue from certain distributors is deferred until the distributor resells the products to end customers due to price protection adjustments and right of returns that cannot be reliably measured. The deferred revenue, net of the associated deferred cost of the inventory, is recorded as deferred margin in the consolidated balance sheets.

Packaging and testing services revenue is recognized upon shipment of serviced products to the customer.

Product Warranty

The Company provides a standard one-year warranty for the products it sells. The Company accrues for estimated warranty costs at the time revenue is recognized. The Company's warranty obligation is affected by product failure rates, the cost of replacement product, freight costs for failed parts and their replacement and other quality assurance costs. The Company monitors its product returns for warranty claims and maintains a reserve for the related warranty cost based on its historical data and anticipated warranty claims known at the time that the estimate is made. If actual warranty costs differ significantly from estimates, revisions to the estimated warranty reserve would be required and any such adjustments could be material.

Shipping and Handling Costs

Shipping and handling costs are included in cost of goods sold.

Research and Development

Research and development costs are expensed as incurred.

Provision for Income Taxes

Income tax expense or benefit is based on income or loss before taxes. Deferred tax assets and liabilities are recognized principally for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts.

The Company is subject to income taxes in a number of jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Company establishes accruals for certain tax contingencies based on estimates of whether additional taxes may be due. While the final tax outcome of these matters may differ from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Significant management judgment is also required in determining whether deferred tax assets will be realized in full or in part. When it is more likely than not that all or some portion of specific deferred tax assets such as net operating losses or foreign tax credit carryforwards will not be realized, a valuation allowance must be established for the amount of the deferred tax assets that cannot be realized. We consider all available positive and negative evidence on a jurisdiction by jurisdiction basis when assessing whether it is more likely than not that deferred tax assets are recoverable. We consider evidence such as our past operating results, the existence of cumulative losses in recent years and our forecast of future taxable income.

In July 2006, the Financial Accounting Standards Board, or FASB, issued a guidance which clarifies the accounting for income taxes by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. The minimum threshold is defined as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty

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percent likely to be realized upon ultimate settlement. Although the guidance on the accounting for uncertainty in income taxes prescribes the use of a recognition and measurement model, the determination of whether an uncertain tax position has met those thresholds will continue to require significant judgment by management. If the ultimate resolution of tax uncertainties is different from what is currently estimated, a material impact on income tax expense could result.

Our provision for income taxes is subject to volatility and could be adversely impacted by changes in earnings or tax laws and regulations in various jurisdictions. We are subject to the continuous examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of changes to reserves, as well as the related net interest and penalties.

Share-based Compensation Expense

The Company maintains an equity-settled, share-based compensation plan under which share options and restricted stock units (the "RSUs") are granted to employees, directors and consultants of the Company.

The fair value of options is determined at the date of grant using the Black-Scholes option pricing model. The fair value of RSUs is based on the fair value of the Company's common share on the date of grant. In May 2010, the Company adopted the Employee Share Purchase Plan (the "ESPP"). The fair value of common shares to be issued under the ESPP is determined using the Black-Scholes pricing model.

The Black-Scholes model requires various highly subjective assumptions including expected term of awards, expected future share price volatility, and expected forfeiture rates, as well as fair value of the Company's common shares prior to its initial public offering (the "IPO").

The Company establishes the expected term based on the historical data of similar entities' data as adjusted for expected changes in future exercise patterns. The Company estimates forfeiture rates based on historical average period of time that options were outstanding and forfeited. The Company estimates expected volatility based on the volatility of similar entities whose shares are publicly available. The risk-free interest rate is based on the U.S. Treasury yields at the time of grant for periods corresponding to the expected term of the options. The expected dividend yield is zero based on the fact that the Company has not historically paid dividends and has no current intention to pay dividends.

Prior to the Company's IPO that became effective on April 28, 2010, the absence of a public market for its common shares required the Company's compensation committee of the board of directors, the members of which the Company believes have extensive business, industry, finance and venture capital experience, to estimate the fair value of the Company's common shares for the purpose of granting options and for determining share-based compensation expense for the periods presented. In response to these requirements, the compensation committee, with input from management, estimated the fair value of the common shares at each meeting when options were granted. The Company commissioned an independent third-party to conduct contemporaneous valuations to assist in the determination of the fair value of the common shares, except for the grant of options on March 1, 2010. The exercise price of options granted on March 1, 2010 was determined after considering a preliminary valuation analysis provided to the Company by the representatives of the Company's underwriters, the valuation of the common shares performed by an independent third-party at December 31, 2009 and other factors.

The Company's contemporaneous valuations, using the AICPA Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation , employed a two step process to arrive at an estimate of the value of the common shares. The first step of the analysis was to estimate the total enterprise value. The Company primarily relied on an income approach, specifically a discounted cash flow analysis, to estimate the total enterprise value. The discounted cash flow analysis involves applying appropriate risk-adjusted discount rates to estimated cash flows, based on forecasted revenue and costs. The assumptions used in connection with these valuations were based on the Company's expected operating performance over the discrete forecast period. A terminal value was estimated for the value of the business beyond the discrete forecasted earnings period. This value was estimated by applying a multiple to the Company's projections in the final year of the forecast period. The multiple was selected based on the data of a peer group of public companies in the industry. The discrete period cash flows and terminal value were then discounted to the present at the Company's estimated cost of capital, which was developed through an analysis of required returns for companies in a similar stage of development. The results of the income approach were tested for reasonableness based on an analysis of the multiples of similar public companies.

The second step was to allocate our total enterprise value to the preferred and common classes of securities based on the relative rights and preferences of each class. The Company relied on the option pricing method, which treats the securities as

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call options on the underlying assets (or enterprise value) to allocate the enterprise value. Significant estimates required in the option pricing method include the expected time to liquidity, risk-free interest rate for the expected time to liquidity, expected dividend yield, fair value of the aggregate enterprise value and expected volatility of the underlying enterprise value.

Additionally, the Company considered a probability-weighted expected return method to estimate the value of the common shares. This methodology considers various scenarios of future exit events, including a public offering, sale, liquidation or remaining private. An estimate of future exit periods and events are made and the exit values are allocated to each class of security based on the rights and preferences that would be exercised to maximize the value of each class, based on seniority. The allocated values are then discounted to the present and weighted based on an assessment of the probability of each scenario. Probabilities of each scenario have been assessed by management at each date, based on consideration of then-current market conditions and changes in the underlying prospects of the Company.

The Company also reviewed a variety of factors in determining the deemed fair value of the common shares such as its own operating and financial performance, the introduction of new products, the price of the preferred share financings with third-party investors in arm's length transactions, the lack of a public market for its common shares, industry growth and volume, the performance of similarly situated companies in our industry and stock market indices, emerging trends and issues, trends in consumer confidence and spending, overall economic indicators and the general economic outlook.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The Company's other comprehensive income (loss) consists of cumulative foreign currency translation adjustments. Total comprehensive income (loss) is presented in the consolidated statements of shareholders' equity.

Leases

Leases entered into by the Company as a lessee are classified as capital or operating leases. Leases that transfer substantially the entire risks and benefits incidental to ownership are classified as capital leases. At the inception of a capital lease, an asset and an obligation are recorded at an amount equal to the lesser of the present value of the minimum lease payments and the asset’s fair market value at the beginning of each lease. Rental payments under operating leases are expensed as incurred.

Risks and Uncertainties

The Company is subject to certain risks and uncertainties. The Company believes changes in any of the following areas could have a material adverse effect on the Company's future financial position or results of operations or cash flows: new product development, including market receptiveness, litigation or claims against the Company based on intellectual property, patent, product regulatory or other factors, competition from other products, general economic conditions, the ability to attract and retain qualified employees and ultimately to sustain profitable operations.

The semiconductor industry is characterized by rapid technological change, competition, competitive pricing pressures and cyclical market patterns. The Company's financial results are affected by a wide variety of factors, including general economic conditions specific to the semiconductor industry and the Company's particular market, the timely implementation of new products, new manufacturing process technology and the ability to safeguard patents and intellectual property in a rapidly evolving market. In addition, the semiconductor market has historically been cyclical and subject to significant economic downturns. As a result, the Company may experience significant period-to-period fluctuations in operating results due to the factors mentioned above or other factors.

The Company's revenue may be impacted by its ability to obtain adequate wafer supplies from foundries and packaging and testing capacity from its in-house facilities. Currently the Company's main foundry is Shanghai Hua Hong NEC Electronic Company Limited, or HHNEC, located in Shanghai, China. HHNEC has been manufacturing wafers for the Company since 2002. HHNEC manufactured 68.7% of the wafers used in the Company's products for the fiscal year ended June 30, 2011. Although the Company believes that its volume of production allows the Company to secure favorable pricing and priority in allocation of capacity in its foundry, however, if foundry capacity is constrained due to market demands, HHNEC, together with other foundry from which the Company purchases wafers, may not be willing or able to satisfy all of the Company's manufacturing requirements on a timely basis and/or at favorable prices The Company is also subject to the risks of service disruptions and raw material shortages by its foundry. Such disruptions, shortages and price increases could harm the Company's operating results.

Recent Accounting Pronouncements

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In June 2011, the FASB issued a new accounting guidance on the presentation of comprehensive income. The new guidance requires the presentation of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The new guidance also requires presentation of adjustments for items that are reclassified from other comprehensive income to net income in the statement where the components of net income and the components of other comprehensive income are presented. The Company is required to adopt this guidance as of the beginning of 2013. The adoption of this guidance will only impact the presentation of the Company's consolidated financial statements.

In December 2010, the FASB issued an amendment to the disclosure of supplementary pro forma information for business combinations. This amendment clarifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendment also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010 with early adoption permitted. The Company adopted the disclosure requirements for its business combinations in its fiscal year 2011.

Effective January 1, 2010, the Company adopted certain provisions of the FASB's updated guidance related to fair value measurements and disclosures, which require new disclosures about significant transfers in and out of Levels 1 and 2 fair value measurements and separate disclosures about purchases, sales, issuances and settlements relating to Level 3 fair value measurements. The updated guidance also clarifies existing disclosure requirements regarding inputs and valuation techniques, as well as the level of disaggregation for each class of assets and liabilities for which separate fair value measurements should be disclosed. The guidance was effective January 1, 2010, except for the separate disclosures about purchases, sales, issuances and settlements relating to Level 3 measurements, which are effective for the Company's consolidated financial statements beginning in the first quarter of fiscal year 2012. The adoption of the updated guidance did not have an impact on the Company's consolidated financial statements and the deferred provisions are not expected to significantly impact to the Company's consolidated financial statements.

2. Concentration of Credit Risk and Significant Customers

The Company manages its credit risk associated with exposure to distributors and direct customers on outstanding accounts receivable through the application of credit approvals, credit ratings and other monitoring procedures. In some instances, the Company also obtains letters of credit from certain customers.

Credit sales, which are mainly on credit terms of 30 to 60 days, are only made to customers who meet the Company's credit standards, while sales to new customers or customers with low credit ratings are usually made on an advance payment basis. The Company's management considers the Company's financial assets to be of good credit quality because its key distributors and direct customers have long-standing business relationships with the Company and the Company has not experienced any significant bad debt write-offs of accounts receivable in the past. The Company's management closely monitors the aging of accounts receivable from its distributors and direct customers, and regularly reviews their financial positions, where available.

Summarized below are individual customers whose revenue or accounts receivable balances were 10% or higher than the respective total consolidated amounts:



	Year Ended June 30,
Percentage of revenue	2011		2010		2009
Customer A	30.6	%	33.0	%	34.1	%
Customer B	36.7	%	41.1	%	43.7	%
Customer C	11.5	%	10.3	%	4.6	%



	June 30,
Percentage of accounts receivable	2011		2010
Customer A	28.5	%	56.1	%
Customer B	32.7	%	8.2	%
Customer C	14.0	%	20.5	%

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3. Segment and Geographic Information

The Company is organized as, and operates in, one operating segment: design, development and marketing of power semiconductor products for computing, consumer electronics, communication and industrial applications. The chief operating decision-maker is the Chief Executive Officer. The financial information presented to the Company's Chief Executive Officer is on a consolidated basis, accompanied by information about revenue by customer and geographic region, for purposes of evaluating financial performance and allocating resources. The Company has one business activity, and there are no segment managers who are held accountable for operations, operating results and plans for products or components below the consolidated unit level. Accordingly, the Company reports as a single operating segment.

The Company sells its products primarily to distributors in the Asia Pacific region, who in turn sell these products to end customers. Because the Company's distributors sell their products to end customers which may have global presence, revenue by geographical location are not necessarily representative of the geographical distribution of sales to end user markets. The revenue by geographical location in the following tables is based on the country or region in which the products were shipped to:



	Year Ended June 30,
	2011		2010		2009
	(in thousands)
Hong Kong	$	326,039	$	295,612	$	181,623
Korea	9,869		4,599		—
China	19,584		4		2,325
United States	2,003		921		841
Other countries	3,813		704		287
	$	361,308	$	301,840	$	185,076

The following is a summary of revenue by product type:



	Year Ended June 30,
	2011		2010		2009
	(in thousands)
Power discrete	$	284,094	$	258,037	$	165,712
Power IC	62,706		43,803		19,364
Packaging and testing services	14,508		—		—
	$	361,308	$	301,840	$	185,076

The location and net book value of the Company's long-lived assets are as follows:



	June 30,
	2011		2010
	(in thousands)
United States	$	10,426	$	5,122
Taiwan	421		355
China	116,955		41,842
Other countries	37		48
	$	127,839	$	47,367

4. Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobsevable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are

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considered observable and the last unobservable, that may be used to measure fair value, which are the following:


•	Level 1 - Quoted prices in active markets for identical assets or liabilities.


•	Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.


•	Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.


•

Fair Value of Financial Instruments

The fair values of cash equivalents are based on observable market prices and have been categorized in Level 1 in the fair value hierarchy. Cash equivalents consist primarily of short term bank deposits. The carrying values of financial instruments such as cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and short term bank borrowings approximate fair value at June 30, 2011 and 2010, due to their short-term maturities.

5. Balance Sheet Components

Accounts receivable:



	June 30,
	2011			2010
	(in thousands)
Accounts receivable	$	61,768		$	39,240
Less: Allowance for price adjustments	(19,235		)	(8,451		)
Less: Allowance for doubtful accounts	(30		)	(30		)
Accounts receivable, net	$	42,503		$	30,759

Inventories:



	June 30,
	2011		2010
	(in thousands)
Raw materials	$	30,713	$	8,602
Work in-process	20,513		8,909
Finished goods	14,025		10,289
	$	65,251	$	27,800

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Property and equipment:



	June 30,
	2011			2010
	(in thousands)
Manufacturing machinery and equipment	$	107,555		$	32,417
Equipment and tooling	9,232			8,300
Computer equipment and software	11,906			11,144
Office furniture and equipment	1,597			1,072
Leasehold improvements	15,949			9,310
	146,239			62,243
Less accumulated depreciation and amortization	(38,617		)	(22,511		)
	107,622			39,732
Equipment and construction in progress	20,217			7,635
	$	127,839		$	47,367

The gross amount of computer software recorded under capital lease was $1,600,000 at June 30, 2011 and 2010. Depreciation expense was $16,261,000, $8,769,000 and $7,261,000 for fiscal year 2011, 2010 and 2009, respectively.

Intangible assets:



	June 30,
	2011			2010
	(in thousands)
Patents and exclusive technology rights	$	1,566		$	1,566
Trade name	250			—
Customer relationships	1,150			—
	2,966			1,566
Less accumulated depreciation	(1,367		)	(950		)
	$	1,599		$	616

Amortization expense for intangible assets was $417,000, $242,000 and $267,000 for the years ended June 30, 2011, 2010 and 2009, respectively.

Based on the intangible assets recorded at June 30, 2011, future amortization expense of intangible assets for the next five fiscal years is as follows:



Year ending June 30,	(in thousands)
2012	$	571
2013	532
2014	365
2015	131
	$	1,599

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Other long term assets:



	June 30,
	2011		2010
	(in thousands)
Prepayment for acquisition of wafer fabrication assets	$	5,000	$	—
Prepayments for property and equipment	2,086		—
Deposits on office leases	521		458
	$	7,607	$	458

On October 1, 2010, in connection with a Foundry Service Agreement entered with Integrated Device Technology, Inc., or IDT, the Company also entered into an Option Agreement with IDT and paid $5,000,000 for the exclusive right to purchase certain assets associated with a wafer fabrication facility from IDT. The option is exercisable between September 1, 2011 and November 15, 2011. The total purchase price to acquire these assets is $26,000,000. If the option is exercised, the $5,000,000 will be applied to the purchase price. In August 2011, the Company announced the intention to exercise the option prior to the November 15, 2011 deadline.

Accrued liabilities:



	June 30,
	2011		2010
	(in thousands)
Accrued salaries and wages	$	2,322	$	810
Accrued vacation	1,383		880
Accrued bonuses	3,760		3,955
Warranty accrual	664		1,275
Stock rotation accrual	1,880		513
Accrued professional fees	1,101		895
ESPP payable	206		227
Customer deposits	204		667
Other accrued expenses	3,603		2,043
	$	15,123	$	11,265

A summary of the warranty accrual, which is included in accrued liabilities for the years ended June 30, 2011, 2010 and 2009 is as follows:



	Year Ended June 30,
	2011			2010			2009
	(in thousands)
Beginning balance	$	1,275		$	1,094		$	1,458
Charged to costs	186			929			843
Utilization	(797		)	(748		)	(1,207		)
Ending balance	$	664		$	1,275		$	1,094

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A summary of the stock rotation accrual, which is included in accrued expenses and other current liabilities for the years ended June 30, 2011, 2010 and 2009 is as follows:



	Year Ended June 30,
	2011			2010			2009
	(in thousands)
Beginning balance	$	513		$	1,144		$	1,955
Charged to statement of income (loss)	5,520			2,556			2,001
Utilization	(4,153		)	(3,187		)	(2,812		)
Ending balance	$	1,880		$	513		$	1,144

Deferred margin

Deferred margin consists of the following:



	June 30,
	2011			2010
Deferred revenue	$	752		$	322
Deferred costs	(257		)	(77		)
Deferred margin	$	495		$	245

Capital leases

Capital lease liabilities include the following:



	June 30,
	2011			2010
Software	$	292		$	851
Technology license	144			156
	436			1,007
Less current portion	(306		)	(571		)
Capital leases -long-term portion	$	130		$	436

The associated assets under capital leases were recorded in property and equipment and intangible assets. Their carrying value was $676,000 and $1,234,000 at June 30, 2011 and 2010, respectively.

Future minimum lease payments at June 30, 2011 are as follows:



Year ending June 30,	(in thousands)
2012	$	324
2013	25
2014	25
2015	25
2016	25
Thereafter	75
	$	499
Less amount representing interest	$	(63	)
Total capital lease liabilities	$	436

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6. Borrowings

In April 2010, one of the Company's subsidiaries in China entered into a line of credit arrangement with a Chinese bank to allow the Company to draw down, from time to time, up to 80% of the balance of the subsidiary's accounts receivable with a maximum amount of 40 million Chinese RMB (equivalent of $6,191,000 as of June 30, 2011) to finance the subsidiary's accounts receivable on a maximum of 120-day repayment term. The interest rate on each drawdown varies and indexes to the published London Interbank Offered Rate per annum. There was not outstanding balance at June 30, 2011. The outstanding loan balance was $3,680,000 at June 30, 2010. The carrying amount of the borrowing at June 30, 2010 approximated its fair value due to short repayment term. The effective interest rates for the borrowings were 3.42% and 3.3% for the fiscal years ended June 30, 2011 and 2010, respectively.

In December 2010, the Company acquired APM and assumed APM's bank borrowing liabilities. These borrowings were made under various line of credit agreements with local banks. The interest rate on each drawdown from these lines of credit varies and indexes to the published London Interbank Offered Rate per annum. The effective interest rate for these borrowings was 3.38% for the fiscal year ended June 30, 2011. APM's property and equipment with carrying amount of $63,961,000 at June 30, 2011 were pledged as collateral under one of the lines of credit. There was no outstanding balance at June 30, 2011.

The following outlines details of each line of credit and its available credit as of June 30, 2011:



			Maximum Limit
		Maximum Limit in	(U.S. Dollar		Available credit
Line of Credit	Maturity Date	Chinese RMB	Equivalent)		June 30, 2011
		(in thousands)
A	July 16, 2011	105,000	$	16,250	$	16,250
B	August 16, 2011	40,000	$	6,191	$	6,191
C	July 20, 2011	30,000	$	4,643	$	4,643
D	July 31, 2011	—	$	3,000	$	3,000

7. Investment in APM and Related Party Transactions

Prior to the APM acquisition in December 2010, the Company held a 40.3% equity interest in APM at June 30, 2010 and 2009. The Company made an additional equity investment of $1,831,000 in APM in October 2010 and increased the equity interest to 43%. The equity interest in APM was accounted for using the equity method of accounting.

The following table is a summary of the Company's investment in APM prior to the APM Acquisition:



	Year Ended June 30,
	2011				2010			2009
	(in thousands)
Beginning of the year		$	26,069			$	19,523		$	19,487
Income (loss) on equity investment in APM		1,768				6,546			(4		)
Additional investment		1,831				—			40
Acquisition		(29,668		)		—			—
End of the year		$	—			$	26,069		$	19,523

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The following tables are summarized financial information of APM at June 30, 2010 and 2009. After the APM Acquisition on December 3, 2010, APM's financial results have been consolidated into the Company's financial statements.



	June 30,
	2010			2009
	(in thousands)
Current assets		$	42,231	$	27,182
Noncurrent assets		57,523		44,740
Total assets		99,754		71,922

Current liabilities		35,925		23,926
Shareholders' equity		63,829		47,996
Total liabilities and shareholders' equity		$	99,754	$	71,922



	Year Ended June 30,
	2010				2009
	(in thousands)
Revenue		$	94,921			$	49,346
Cost of goods sold		(79,810		)		(44,981		)
Operating expense		(3,828		)		(4,192		)
Other income (expenses), net		294				(53		)
Income tax benefit (expense)		4,190				(456		)
Net income (loss)		$	15,767			$	(336	)

Purchase of Services and Used Equipment

Prior to the APM acquisition, the Company was a major customer of APM and purchased semiconductor packaging and testing services from APM during its ordinary course of business. During the fiscal years ended June 30, 2010 and 2009, the Company also purchased certain used equipment from APM. The related party transactions and balances are as follows:



	Year Ended June 30,
	2011				2010				2009
	(in thousands)
Accounts payable due to APM at beginning of year		$	10,100			$	9,281			$	8,746
Purchase of semiconductor packaging and testing services from APM		29,186				79,729				45,112
Purchase of used equipment from APM		—				604				261
Payments made to APM		(27,909		)		(79,514		)		(44,838		)
APM acquisition		(11,377		)		—				—

Accounts payable due to APM at end of year		$	—			$	10,100			$	9,281

The carrying amounts of payables due to APM approximated their fair values due to their short maturity term.

8. Business Combination

On December 3, 2010, the Company acquired all of the issued and outstanding shares of APM that were not already owned by the Company. Based on the closing price of the Company's common share at $13.06 per share on December 3, 2010, the acquisition date, the total consideration for the APM acquisition was $40,045,000, comprising of $16,979,000 in cash and 1,766,159 shares of the Company's common share. Prior to the APM acquisition, the Company held a 40.3% equity interest in APM at June 30, 2010. The Company made an additional equity investment of $1,831,000 in APM in October 2010 and increased its equity interest in APM to 43%. Upon closing of the APM acquisition, APM became a wholly-owned subsidiary of the Company. The purpose of the acquisition is to further strengthen the Company's package development capability and enhance the Company's delivery performance.

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The Company used the acquisition method of accounting to account for the business combination. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities assumed and the equity interests issued by the Company. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the consideration transferred and the acquisition-date fair value of previous equity interest over the fair value of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the differences is recognized directly in the statement of income. There was no goodwill or gain from bargain purchase arising from the APM Acquisition.

The consideration transferred for the APM acquisition, the acquisition-date fair value of previous equity interest in APM and the purchase price allocation are as follows:



	At acquisition date
Purchase consideration at December 3, 2010	(in thousands)
Cash	$	16,979
Equity instruments (1,766,159 common shares)		23,066

Total consideration transferred		40,045

Fair value of equity investment in APM held before the business combination		30,505

Total consideration	$	70,550

Identifiable assets acquired and liabilities assumed:
Cash and cash equivalents	$	15,410
Accounts receivables and other receivable		6,549
Accounts receivables from the Company		11,377
Inventories		10,510
Prepayments		275
Property and equipment		51,892
Trade name		250
Customer relationships		1,150
Deferred tax assets		7,748
Accounts payable		(22,157	)
Borrowings		(11,346	)
Income tax payable		(1,108	)

Total identifiable net assets	$	70,550

The acquisition related costs of $360,000, including accounting, tax and audit fees, were recorded in selling, general and administrative expenses in the consolidated income statement for the fiscal year ended June 30, 2011.

The fair values of the acquired trade name of $250,000 and the customer relationship of $1,150,000 were determined based on the income approach and multi-period excess earnings method. Trade name and customer relationships are amortized over the estimated life of 3 years and 4 years on a straight line basis, respectively.

The fair value of the acquired property and equipment of $51,892,000 was based on the cost approach and excess earnings approach and considered:


•	estimation of the current replacement cost of the assets;


•	physical depreciation and certain obsolescence adjustments; and


•	estimation of the net present value of expected future cash flows to be generated by the acquired fixed assets.

The carrying value of the 43% equity interest in APM was $29,668,000 on the acquisition date. The Company recognized a gain of $837,000 as a result of the fair value being higher at the acquisition date. The gain was included in the Company's

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statement of income for the fiscal year ended June 30, 2011.

The Company's revenue for the fiscal year ended June 30, 2011 included $14,508,000 of revenue generated by APM in providing packaging and testing services to third parties subsequent to the acquisition. The Company's net income also included APM's operating results which were reflected in the Company's consolidated financial statements from the date of acquisition.

Unaudited Supplemental Pro Forma Information

The unaudited pro forma financial results combines the historical results of APM with those of the Company as if the acquisition had been completed as of the beginning of current year and as of the comparable prior year. The pro forma weighted average number of shares outstanding also assumes that the shares issued as purchase consideration were outstanding as of the beginning of current year and as of the comparable prior year.



	Year Ended June 30,
	2011			2010
	(in thousands)
Revenue	$	372,000	$	320,229
Net income	$	39,398	$	47,073
Pro forma net income per share:
- Basic per share	$	1.61	$	3.81
- Diluted per share	$	1.52	$	2.05

These amounts have been calculated after eliminating APM's inter-company revenue from the Company and associated cost of goods sold, applying the Company's accounting policies and adjusting the results of APM to reflect the additional cost of goods sold and amortization that would have been charged assuming the fair value adjustments to inventory, fixed assets and intangible assets had been applied from July 1, 2010 for year ended June 30, 2011 and from July 1, 2009 for year ended June 30, 2010.

The pro forma financial information is presented for information purposes only and is not indicative of the results of operations that would have been achieved if the acquisition of APM had taken place at the beginning of each of the periods presented, nor is it indicative of the future results of the combined company.

9. Shareholders' Equity

Common Shares

The Company's bye-laws, as amended, authorized the Company to issue 50,000,000 common shares with par value of $0.002 each as of June 30, 2011. Each common share is entitled to one vote. The holders of common shares are also entitled to receive dividends whenever funds are legally available and when and if declared by the board of directors, subject to the prior rights of holders of all classes of shares outstanding. No dividends had been declared as of June 30, 2011 .

As disclosed in Note 8 to the consolidated financial statements, on December 3, 2010, the Company issued 1,766,159 common shares valued at $13.06 per share as part of the consideration in the APM Acquisition.

On October 22, 2010, the Company's board of directors authorized a $25.0 million share repurchase program. Under this repurchase program the Company may, from time to time, repurchase shares from the open market or in privately negotiated transactions, subject to supervision and oversight by the Company's board of directors. In May 2011, the Company repurchased 50,000 shares of its common shares from the open stock market for a total cost of $693,000. Shares repurchased are accounted for as treasury shares and the total cost of shares repurchased is recorded as a reduction to shareholders' equity.

On April 28, 2010, the Company's initial public offering (the “IPO”) became effective and closed on May 4, 2010, in which 5,085,985 common shares were sold, including 3,400,000 shares newly issued and 1,685,985 shares sold by the Company's selling shareholders, at the IPO price of $18.00 per share. Gross proceeds received by the Company from the 3,400,000 shares were $61,200,000, and net proceeds were $53,262,000 after deducting $4,284,000 for underwriting discounts and commissions and approximately $3,654,000 for other offering related costs. All of the Company's outstanding preferred shares were automatically converted into common shares and these preferred shares ceased to exist upon the closing of the IPO.

On March 17, 2010, the shareholders of the Company approved a 2-to-1 reverse share split of the Company's common

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and preferred shares which became effective on March 17, 2010. All share and per share information included in the accompanying financial statements has been adjusted to reflect this reverse share split.

During the year ended June 30, 2009, the Company repurchased from its chief executive officer 31,914 shares of its own common shares at $9.40 per share for a total amount of $300,000.

Convertible Preferred Shares

At June 30, 2009, the Company had 5,050,000 Series A convertible preferred shares, 2,488,094 Series B convertible preferred shares and 3,174,000 Series C convertible preferred shares outstanding. On May 4, 2010, concurrent with the closing of the Company's IPO, all of the Company's outstanding preferred shares were automatically converted into 10,712,094 shares of common shares and the then-existing classes of preferred stock ceased to exist. At June 30, 2011 and 2010, the Company had no preferred shares outstanding and had 10,000,000 authorized undesignated preferred shares.

10. Share-based Compensation

2000 Share Plan

The 2000 Share Plan (the “2000 Plan”), as amended, authorized the board of directors to grant incentive share options and nonstatutory share options to employees, directors and consultants of the Company and its subsidiaries for up to 5,425,000 common shares. Under the 2000 Plan, incentive share options and nonstatutory share options were to be granted at a price that was not less than 100% and 85% of the fair value of the common share at the date of grant for employees and consultants, respectively. Options generally vest over a five-year period, 20% on the first anniversary from the grant date and ratably each month over the remaining 48-month period, and are exercisable for a maximum period of ten years after date of grant. Incentive share options granted to shareholders who own more than 10% of the outstanding shares of all classes of shares of the Company at the time of grant must be issued at an exercise price not less than 110% of the fair value of the common shares on the date of grant. In connection with the adoption of the 2009 Share Option/Share Issuance Plan (“2009 Plan”) on September 18, 2009, the 2000 Share Plan was terminated and no further awards were granted under the 2000 Share Plan.

2009 Share Option/Share Issuance Plan

The 2009 Share Plan (the “2009 Plan”), as approved in September 2009 at the annual general meeting of shareholders, and as amended and restated in connection with the Company's IPO, authorized the board of directors to grant incentive share options, nonstatutory share options and restricted shares to employees, directors, and consultants of the Company and its subsidiaries for up to 1,250,000 common shares. The number of common shares available for issuance under the Plan shall automatically increase in January each calendar year during the term of the Plan, beginning with calendar year 2011, by the lesser of 3% of the total number of common shares outstanding or 750,000 shares. This increase was 729,243 shares for calendar year 2011.

Under the 2009 Plan, incentive share options and restricted stock units are to be granted at a price that is not less than 100% and nonstatutory share options are to be granted not less than 85% of the fair value of the common shares, at the date of grant for employees and consultants. Options and restricted stock units generally vest over a five-year period, 20% on the first anniversary from the grant date and ratably each month over the remaining 48-month period, and are exercisable for a maximum period of ten years after date of grant. Incentive share options granted to shareholders who own more than 10% of the outstanding shares of all classes of shares of the Company at the time of grant must be issued at an exercise price not less than 110% of the fair value of the common shares on the date of grant.

The 2009 Plan is divided into three incentive compensation programs: Discretionary Grant Program, Share Issuance Program and Automatic Grant Program. Under the Discretionary Grant Program, eligible individuals may be granted options to purchase common shares and share appreciation rights tied to the value of the Company's common shares. Under the Share Issuance Program, eligible individuals may be issued common shares pursuant to restricted share awards, restricted share units, performance shares or other share-based awards which vest upon the attainment of pre-established performance milestones or the completion of a designated service period. Under the Automatic Grant Program, eligible non-employee board members will automatically receive options to purchase common shares at designated intervals over their period of continued board service. Each non-employee board members was granted an option to purchase 7,500 common shares on April 28, 2010 equal to the IPO price. On the date of each annual shareholders meeting beginning in 2010, each individual who commences service as a non-employee board member by reason of his or her election to the board at such meeting and each individual who will continue to serve as a non-employee board member will automatically be granted an option to purchase 7,500 common shares.

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A summary of the status of the 2000 Plan and 2009 Plan and changes during the years then ended is presented as follows:



			Weighted		Weighted		Aggregate
	Number of		Average		Average Grant		Intrinsic Value
	Options		Exercise Price		Date Fair Value		at Date of
	Outstanding		Per Share		Per Share		Each Exercise
As of June 30, 2008	4,223,749		$	7.38
Options granted	447,500		9.18		$	4.18
Options exercised	(34,625	)	1.46				$	301,477
Options cancelled or forfeited	(525,332	)	10.26

As of June 30, 2009	4,111,292		7.26
Options granted	911,250		15.04		$	7.37
Options exercised	(70,050	)	2.45				$	667,335
Options cancelled or forfeited	(219,359	)	10.22

As of June 30, 2010	4,733,133		8.70
Options granted	422,500		12.82		$	6.73
Options exercised	(585,941	)	4.45				$	4,759,630
Options cancelled or forfeited	(107,817	)	12.50

As of June 30, 2011	4,461,875		$	9.56

Information with respect to share options outstanding and share options exercisable at the end of the fiscal year ended June 30, 2011 is presented as follows:



	Options Outstanding					Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted-Average Remaining Life (Years)	Weighted-Average Exercise Price		Number Outstanding	Weighted-Average Exercise Price
$ 0.40 - $0.80	539,806		2.58	$	0.72	539,806	$	0.72
$ 2.00 - $6.00	695,734		4.09	3.96		695,734	3.96
$ 6.40 - $8.60	659,208		6.33	7.92		494,002	7.89
$ 9.40 - $11.00	615,885		6.88	10.45		412,874	10.56
$ 11.40 - $12.68	447,626		8.56	12.23		127,507	11.51
$ 12.91 - $12.91	28,500		9.79	12.91		—	—
$ 13.00 - $13.00	753,151		5.91	13.00		539,592	13.00
$ 13.83 - $15.00	211,965		7.81	14.35		49,230	14.55
$ 17.90 - $17.90	37,500		8.84	17.90		8,748	17.90
$ 18.00 - $18.00	472,500		8.83	18.00		137,322	18.00
$ 0.40 - $18.00	4,461,875		6.13	$	9.56	3,004,815	$	7.73

Options vested and expected to vest	$	4,263,953	6.01	$	9.36

Aggregate intrinsic value of options outstanding	$	19,119,623
Aggregate intrinsic value of options vested and expected to vest	$	18,927,533
Aggregate intrinsic value of options exercisable	$	17,338,613

Options expected to vest are the result of applying the pre-vesting forfeiture rate assumption to total outstanding options.

Share option exercises were settled with newly issued common shares. The weighted average fair values of the options

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granted on the date of grant were determined using the Black-Scholes option pricing model. The significant inputs into the model were as follows:



	Year Ended June 30,
	2011	2010	2009
Fair value of common shares at grant date	$10.22 - $13.83	$8.40 - $18.00	$7.60 - $13.00
Exercise price	$10.22 - $13.83	$8.40 - $18.00	$7.60 - $13.00
Volatility rate	48.31% - 49.09%	49% - 50%	44% - 50%
Risk-free interest rate	1.48% - 2.40%	1.8% - 2.6%	1.7% - 3.3%
Expected option life	5.5 years	5.5 years	5.5 years
Dividend yield	0%	0%	0%

Restricted Stock Unit Activity

A summary of the restricted stock unit activities under the 2009 Plan and changes during the fiscal year ended June 30, 2011 is presented as follows:



	Restricted Stock Units			Weighted Average Grant Date Fair Value Per Share		Weighted Average Remaining Recognition Period (Years)		Aggregate Intrinsic Value
Outstanding at July 1, 2010		—			—		—
Awards granted		227,500		$	12.38		2.46
Awards forfeited		(14,200	)		—		—
							—
Outstanding at June 30, 2011		213,300		$	12.38		2.46	$	2,826,225

The estimated fair value of restricted stock units is based on the market price of the Company's stock on the grant date.

Employee Stock Purchase Plan (the “ESPP”)

The Employee Share Purchase Plan (“Purchase Plan” or “ESPP”) was established in May 2010 upon the completion of the Company's IPO. The Purchase Plan provided for a series of overlapping offering periods with a duration of 24 months, with new offering periods, except the first offering period, which commenced on April 28, 2010, generally beginning on May 15 and November 15 of each year. The Purchase Plan allows employees to purchase common shares through payroll deductions of up to 15% of their eligible compensation. Such deductions will accumulate over a six-month accumulation period without interest. After such accumulation period, common shares will be purchased at a price equal to 85% of the fair market value per share on either the first day the offering period or the last date of the accumulation period, whichever is less. The maximum number of shares that may be purchased on any purchase date may not exceed 875 shares for a total of 3,500 shares per a 24-month offering period. In addition, no participant may purchase more than $25,000 worth of common stock in any one calendar year period.

The Company has initially reserved 600,000 common shares for issuance under the ESPP. The share reserve will automatically increase in January of each calendar year during the term of the ESPP, beginning with calendar year 2011, by the lesser of 0.75% of the outstanding common shares or 250,000 shares. This increase was 182,311 shares for calendar year 2011.

The ESPP is compensatory and results in compensation expense. The fair values of common shares to be issued under the ESPP were determined using the Black-Scholes pricing model. The significant inputs into the model were as follows:



	Year Ended June 30,
	2011	2010
Volatility rate	50%	50%
Risk-free interest rate	0.2% - 1.0%	0.2% - 1.0%
Expected term	1.3 years	1.3 years
Dividend yield	0%	0%

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T he total share-based compensation expense, including share options, the ESPP and restricted stock units described above, recognized in the consolidated statements of income (loss) as follows:



	Year Ended June 30,
	2011		2010		2009
	(in thousands)
Cost of goods sold	$	629	$	317	$	381
Research and development	1,716		905		1,272
Selling, general and administrative	3,829		2,337		1,931

	$	6,174	$	3,559	$	3,584

Total unrecognized compensation expense from share options as of June 30, 2011 was $5,444,000 including estimated forfeitures, which is expected to be recognized over a weighted-average period of 1.63 years.

In May 2009, the Company cancelled 160,000 shares of options previously granted to two executives at $13.00 per share in February 2008 and August 2008 and granted the same number of shares of options at the then-fair value of the common shares of $7.60 per share. The unamortized share-based compensation expense continues to be charged to the statements of income (loss) and an additional $180,000 share-based compensation expense was calculated at the grant date. Based on the new vesting schedules, share-based compensation expense of $35,000, $69,000 and $53,000 was recorded for the fiscal years ended June 30, 2011, 2010 and 2009, respectively.

11. Net Income or Loss Per Share

Basic and diluted net income per share attributable to common shareholders is presented in conformity with the two-class method required for participating securities. In May 2010, all of the Company's outstanding convertible preferred shares were converted into common shares in connection with the IPO. Prior to the conversion, holders of Series A, Series B and Series C convertible preferred share were each entitled to receive 8% per annum non-cumulative dividends, payable prior and in preference to any dividends on any other shares of the Company's capital stock. No such dividends were paid.

For periods prior to the conversion of the convertible preferred shares, net income per share information is computed using the two-class method. Under the two-class method, basic net income per share attributable to common shareholders is computed by dividing the net income attributable to common shareholders by the weighted average number of common shares outstanding during the period. Net income attributable to common shareholders is computed by subtracting from net income the portion of earnings generated for the period through the IPO that the preferred shareholders would have been entitled to receive pursuant to their dividend rights had this portion of net income been distributed.

Diluted net income per share is computed by dividing the net income attributable to common shareholders for the period by the weighted average number of common shares outstanding and potential common shares assuming the effect of potential common shares is dilutive. Potential common shares are calculated under the treasury stock method and include incremental shares of common share issuable upon the exercise of share options and vest of restricted stock units. Under the treasury stock method, potential common shares outstanding is not included in the computation of diluted net income per share when their effect is anti-dilutive.

We had a net loss applicable to common shareholders for the year ended June 30, 2009. Accordingly, our diluted EPS calculation for fiscal year 2009 was equivalent to our basic EPS calculation because it excluded any assumed exercise or conversion of potential diluted securities because they were deemed to be anti-dilutive, meaning their inclusion would have reduced the reported net loss per share in those respective years.

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The following table presents the calculation of basic and diluted net income per share attributable to common shareholders:



	Year Ended June 30,
	2011		2010			2009
	(in thousands, except per share data)
Numerator:
Basic:
Net income (loss)	$	37,827	$	37,824		$	(901	)
8% non-cumulative dividends on convertible preferred stock	—		(3,453		)	—
Net income attributable to common stockholders - Basic	37,827		34,371			(901		)

Diluted:
Adjustment to net income (loss) for dilutive securities	—		3,453			—
Net income (loss) attributable to common stockholders - Diluted	$	37,827	$	37,824		$	(901	)

Denominator:
Basic:
Weighted average shares of common stock used in computing basic net income per share	23,495		10,594			7,914
Diluted:
Add weighted average effect of dilutive securities:
Convertible preferred shares	—		8,926			—
Share options, RSUs and ESPP	1,494		1,672			—
Weighted average shares of common stock used in computing diluted net income per share	24,989		21,192			7,914
Net income per share attributable to common shareholders:
Basic	$	1.61	$	3.24		$	(0.11	)
Diluted	$	1.51	$	1.78		$	(0.11	)

The following potential dilutive securities are not included in the above calculation because their effect was anti-dilutive for the periods indicated:



	Year Ended June 30,
	2011	2010	2009
	(in thousands)
Convertible preferred shares	—	—	10,712
Share options to purchase common shares	1,623	2,120	4,111
ESPP to purchase common shares	464	—	—
Total potential diluted securities	2,087	2,120	14,823

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12. Income Taxes

The provision for (benefit from) income taxes is comprised of:



	Year Ended June 30,
	2011			2010			2009
				(in thousands)
U.S. federal taxes:
Current	$	106		$	247		$	(369	)
Deferred	(94		)	(152		)	(400		)
Non-U.S. taxes:
Current	2,487			2,375			958
Deferred	172			(1,028		)	(489		)
State taxes, net of federal benefit:
Current	4			85			66
Deferred	(66		)	(30		)	42

Total provision (benefit)	$	2,609		$	1,497		$	(192	)

The reconciliation of the federal statutory income tax rate to our effective income tax rate is as follows (in percentage):



	Year Ended June 30,
	2011		2010		2009
United States statutory rate	34.0	%	34.0	%	34.0	%
State taxes, net of federal benefit	(0.2	)	0.1		(7.9	)
Foreign taxes, net	(25.4	)	(29.9	)	(97.1	)
Research and development credit	(1.9	)	(0.6	)	50.1
Change in valuation allowance	—		—		49.7
Non-deductible expenses	—		0.2		(11.2	)
	6.5	%	3.8	%	17.6	%

The domestic and foreign components of income (loss) before taxes are:



	Year Ended June 30,
	2011		2010			2009
U.S. operations	$	2,329	$	(519	)	$	(769	)
Non-U.S. operations	38,107		39,840			(324		)
Total operating income (loss)	$	40,436	$	39,321		$	(1,093	)

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows:

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	June 30,
	2011			2010
	(in thousands)
Accrued compensation	1,464			730
Net operating loss carryforwards	107			808
Depreciation	7,632			537
Tax credits	2,638			1,830
Accruals and reserves	400			131

Total deferred tax assets	12,241			4,036
Valuation allowance	(1,445		)	(1,233		)
	$	10,796		$	2,803

The breakdown between current and non-current deferred tax assets and liabilities is as follows:



	June 30,
	2011			2010
	(in thousands)
Current deferred tax assets	$	1,773		$	753
Long term deferred tax assets	9,048			2,075
Long term deferred tax liabilities	(25		)	(25		)

Total deferred tax assets	$	10,796		$	2,803

At June 30, 2011 and 2010, we provided a valuation allowance for our state research and development credit carryforward deferred tax assets, as we generated more state tax credits each year than what we can utilize. We intend to maintain a partial valuation allowance equal to the state research and development credit carryfowards until sufficient positive evidence exists to support reversal of the valuation allowance.

At June 30, 2011, we had federal tax credit carryforwards of approximately $1,193,000. The federal tax credits begin to expire in 2024, if not utilized. At June 30, 2011, we had state net operating loss carryforwards of approximately $1,896,000 and tax credit carryforwards of approximately $2,163,000. The state net operating losses expire in 2022, if not utilized. The state tax credits carryforward indefinitely.

We have not provided for withholding taxes on the undistributed earnings of our foreign subsidiaries because we intend to reinvest such earnings indefinitely. As of June 30, 2011, the cumulative amount of undistributed earnings considered permanently reinvested is $22,000,000. The determination of the unrecognized deferred tax liability on these earnings is not practicable. Should we decide to remit this income to the Bermuda parent company in a future period, our provision for income taxes may increase materially in that period.

At June 30, 2011, we had approximately $6,437,000 in total unrecognized tax benefits. A reconciliation of the beginning and ending amount of unrecognized tax benefits from July 1, 2008 to June 30, 2011 is as follows:



	Years ended June 30,
	2011		2010		2009
	(in thousands)
Balance at beginning of year	8,296		6,840		6,493
Additions based on tax positions related to the current year	496		1,458		1,038
Additions (reductions) based on tax positions related to prior years	(2,308	)	77		(627	)
Reductions due to lapse of applicable statute of limitations	(47	)	(79	)	(64	)

Balance at end of year	6,437		8,296		6,840

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At June 30, 2011, the total unrecognized tax benefits of $6,437,000, including $3,725,000 of unrecognized tax benefits that have been netted against the related deferred tax assets. The remaining $2,712,000 was recorded within long-term income tax payable on our consolidated balance sheet as of June 30, 2011.

The total unrecognized tax benefits of $6,437,000 at June 30, 2011 included $5,001,000 that, if recognized, would reduce the effective income tax rate in future periods. We do not anticipate any material changes to our uncertain tax positions during the next twelve months.

We recognize interest and penalties related to uncertain tax positions in income tax expense. To the extent accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision in the period that such determination is made. The amount of interest and penalties accrued at June 30, 2011 was $370,000, of which $60,000 was recognized in the year ended June 30, 2011. The amount of interest and penalties accrued at June 30, 2010 was $310,000, of which $57,000 was recognized in the year ended June 30, 2010.

We file federal and state income tax returns in the United States and in various foreign jurisdictions. The tax years 2001 to 2011 remain open to examination by U.S. federal and state tax authorities. The tax years 2005 to 2011 remain open to examination by material foreign tax authorities.

We are subject to ongoing tax examinations of our tax returns by the Internal Revenue Service and other tax authorities in various jurisdictions. In accordance with the guidance on the accounting for uncertainty in income taxes, we regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. These assessments can require considerable estimates and judgments. If our estimate of income tax liabilities proves to be less than the ultimate assessment, then a further charge to expense would be required. If events occur and the payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when we determine the liabilities are no longer necessary.

13. Employee Benefit Plans

The Company maintains a 401(k) retirement plan for the benefit of qualified employees in the United States of America. Employees who participate may elect to make salary deferral contributions to the plan up to 100% of the employees' eligible salary subject to annual Internal Revenue Code maximum limitations. The employer's contribution is discretionary. The Company had not made any contributions for eligible employees as of June 30, 2011.

The Company makes mandatory contributions for its employees to the respective local governments in terms of retirement, medical insurance and unemployment insurance, where applicable, according to labor and social security laws and regulations of the countries and areas in which the Company operates. The contribution rates are 7.7%, 10.0% to 22.0% and 6.0% for the United States of America, China and Taiwan, respectively. The Company has no obligations for the payment of such social benefits beyond the required contributions as set out above.

14. Commitments and Contingencies

Operating leases obligation

The Company leases its office facilities and certain office equipment under non-cancelable operating leases that expire through 2022. Rent expense related to the Company's operating leases was $2,364,000, $1,704,000 and $1,600,000 for the fiscal years ended June 30, 2011, 2010 and 2009, respectively. Future minimum lease payments of these leases at June 30, 2011 are as follows:



Year ending June 30,	Operating Leases
	(in thousands)
2012	$	2,750
2013	2,605
2014	2,877
2015	2,468
2016	1,914
Thereafter	7,535
	$	20,149

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Purchase commitments

As of June 30, 2011 and 2010, the Company had approximately $22,014,000 and $33,357,000 outstanding purchase commitments for purchases of semiconductor raw materials, wafers and packaging and testing services, respectively.

As of June 30, 2011 and and 2010, the Company had approximately $5,170,000 and $7,032,000 capital commitments for the purchase of property and equipment, respectively.

Contingencies and Indemnities

The Company is currently not a party to any material legal proceedings. The Company has in the past, and may from time to time in the future, becomes involved in legal proceedings arising from the normal course of business activities. The semiconductor industry is characterized by frequent claims and litigation, including claims regarding patent and other intellectual property rights as well as improper hiring practices. Irrespective of the validity of such claims, the Company could incur significant costs in the defense thereof or could suffer adverse effects on its operations.

The Company is a party to a variety of agreements that it contracted with various parties. Pursuant to these agreements, the Company may be obligated to indemnify another party to such an agreement with respect to certain matters. Typically, these obligations arise in the context of contracts entered into by the Company, under which the Company customarily agrees to hold the other party harmless against losses arising from a breach of representations and covenants related to such matters as title to assets sold, certain intellectual property rights, specified environmental matters and certain income taxes. In these circumstances, payment by the Company is customarily conditioned on the other party making a claim pursuant to the procedures specified in the particular contract, which procedures typically allow the Company to challenge the other party's claim. Further, the Company's obligations under these agreements maybe limited in time and/or amount, and in some instances, the Company may have recourse against third parties for certain payments made by it under these agreements. the Company has not recorded any liability for these indemnities in the accompanying consolidated balance sheets.

15. Restricted Net Assets

Laws and regulations in China permit payments of dividends by the Company's subsidiaries in China only out of their retained earnings, if any, as determined in accordance with China accounting standards and regulations. Each China subsidiary is also required to set aside at least 10% of its after-tax profit based on China accounting standards each year to its statutory reserves until the cumulative amount of such reserves reaches 50% of its registered capital. As a result of these China laws and regulations, the Company's China subsidiaries are restricted in their abilities to transfer a portion of their net assets to the Company. As of June 30, 2011 and 2010, the balance of the Company's China subsidiaries' restricted statutory reserves amounted to approximately $81,516,000 and $21,828,000, or 31.3% and 11.5%, of our total consolidated net assets, respectively. As the Company's China subsidiaries are not revenue generating operating units, the Company does not expect to provide any such dividends, loans or advances from its China subsidiaries for working capital and other funding purposes.

ADDITIONAL INFORMATION - FINANCIAL STATEMENT SCHEDULE I

ALPHA AND OMEGA SEMICONDUCTOR LIMITED (PARENT COMPANY BASIS)

CONDENSED UNCONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in thousands)



	June 30,
	2011			2010
ASSETS
Current assets:
Cash and cash equivalents	$	29,650		$	57,465
Accounts receivable-intercompany	20,555			21,912
Other current assets	33			282
Total current assets	50,238			79,659
Investment in APM	—			26,069
Other long-term assets	5,000			—
Intercompany loan receivable	4,500			—
Investment in subsidiaries	201,320			84,502
Total assets	$	261,058		$	190,230

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	808		$	784
Total liabilities	808			784

Shareholders' equity:
Preferred shares, par value $0.002 per share:
Authorized: 10,000 shares; Issued and outstanding: none at June 30, 2011 and 2010	—			—
Common shares, par value $0.002 per share:
Authorized: 50,000 shares; Issued and outstanding: 24,612 shares and 24,562 shares at June 30, 2011 and 22,101 shares and 22,101 shares at June 30, 2010	49			44
Treasury shares at cost; 50 shares at June 30, 2011 and none at June 30, 2010	(693		)	—
Additional paid-in capital	153,004			119,652
Accumulated other comprehensive income	934			621
Retained earnings	106,956			69,129
Total shareholders’ equity	260,250			189,446
Total liabilities and shareholders’ equity	$	261,058		$	190,230

The accompanying notes are an integral part of these financial statements.

ADDITIONAL INFORMATION - FINANCIAL STATEMENT SCHEDULE I

ALPHA AND OMEGA SEMICONDUCTOR LIMITED (PARENT COMPANY BASIS)

CONDENSED UNCONSOLIDATED STATEMENTS OF INCOME (LOSS)

(in thousands)



	Fiscal Year Ended June 30,
	2011			2010			2009
Operating expenses:
Selling, general and administrative	$	5,110		$	2,234		$	578
Total operating expenses	5,110			2,234			578
Operating loss	(5,110		)	(2,234		)	(578		)

Interest income	75			4			80
Income (loss) on equity investment in APM	1,768			6,546			(4		)
Gain on equity interest in APM	837			—			—
Income (loss) on equity investment in subsidiaries	40,257			33,508			(399		)
Net income (loss)	$	37,827		$	37,824		$	(901	)

The accompanying notes are an integral part of these financial statements.

ADDITIONAL INFORMATION - FINANCIAL STATEMENT SCHEDULE I

ALPHA AND OMEGA SEMICONDUCTOR LIMITED (PARENT COMPANY BASIS)

CONDENSED UNCONSOLIDATED CASH FLOWS

(in thousands)



	Fiscal Year Ended June 30,
	2011			2010			2009
Cash flows from operating activities
Net income (loss)	$	37,827		$	37,824		$	(901	)
Adjustments to reconcile net income (loss) to net cash used by operating activities:
Share-based compensation expense	210			215			—
Equity in net (income) loss of subsidiaries	(40,257		)	(33,508		)	399
Equity share of net (income) loss of APM	(1,768		)	(6,546		)	4
Gain on acquisition of equity investment	(837		)	—			—
Changes in working capital, net of impact of acquisition:
Accounts receivable - intercompany	1,641			(451		)	(4,616		)
Other current assets	249			(281		)	—
Accounts payable and accrued liabilities	499			205			46
Net cash used in operating activities	(2,436		)	(2,542		)	(5,068		)

Cash flows from investing activities
Acquisition of APM	(16,979		)	—			—
Prepayment for acquisition of wafer fabrication assets	(5,000		)	—			—
Intercompany loan receivable	(4,500		)	—			—
Additional investment in APM before the APM acquisition	(1,831		)	—			(40		)
Net cash used in investing activities	(28,310		)	—			(40		)

Cash flows from financing activities
Net proceeds from (payments of issuance costs for) the IPO	(610		)	53,872			—
Proceeds from exercise of share options	2,622			172			51
Proceeds from employee stock purchase plan	1,612			—			—
Payment for repurchase of common shares	(693		)	—			(300		)
Net cash provided by (used in) financing activities	2,931			54,044			(249		)

Net increase (decrease) in cash and cash equivalents	(27,815		)	51,502			(5,357		)
Cash and cash equivalents at beginning of period	57,465			5,963			11,320
Cash and cash equivalents at end of period	$	29,650		$	57,465		$	5,963

ALPHA AND OMEGA SEMICONDUCTOR LIMITED (PARENT COMPANY BASIS)

NOTES TO THE CONDENSED UNCONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

Alpha and Omega Semiconductor Limited is the parent company of all Alpha and Omega Semiconductor subsidiaries. It was incorporated in Bermuda on September 27, 2000 as an exempted limited liability company. The address of its registered office is Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

The accompanying condensed parent company financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X, as the restricted net assets of and its subsidiaries exceed 25% of the consolidated net assets of Alpha and Omega Semiconductor Limited and its subsidiaries (the “Company”).

The parent company records its investment in subsidiaries under the equity method of accounting. Such investment is presented on the balance sheet as "Investment in subsidiaries" and the subsidiaries' net income (loss) are recognized based on the effective shareholding percentage as "Equity in income (loss) of subsidiaries" on the statement of income (loss). Intercompany balances and transactions have not been eliminated.

Certain information and footnote discloses normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the consolidated financial statements of the Company.

2. Restricted net assets of subsidiaries

Laws and regulations in China permit payments of dividends by the Company's subsidiaries in China only out of their retained earnings, if any, as determined in accordance with China accounting standards and regulations. Each China subsidiary is also required to set aside at least 10% of its after-tax profit based on China accounting standards each year to its statutory reserves until the cumulative amount of such reserves reaches 50% of its registered capital. As a result of these China laws and regulations, the Company's China subsidiaries are restricted in their abilities to transfer a portion of their net assets to the Company. As of June 30, 2011 and 2010, the balance of the Company's China subsidiaries' restricted statutory reserves amounted to approximately $81,516,000 and $21,828,000, or 31.3% and 11.5%, of our total consolidated net assets, respectively. As the Company's China subsidiaries are not cash or revenue generated operating units, the Company does not expect to obtain any such dividends, loans or advances from its China subsidiaries for working capital and other funding purposes.

3. Commitments and contingencies

For a discussion of the Company’s commitments and contingencies, see Note 14 of the Company’s consolidated financial statements.

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SCHEDULE II

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

VALUATION AND QUALIFYING ACCOUNTS

(in thousands)



	Allowance			Allowance			Allowance
	for Doubtful			for Price			for Deferred
	Accounts			Adjustments			Tax Assets
	(in thousands)
June 30, 2008	$	87		$	8,769		$	1,209
Additions	—			57,007			330
Reductions	(57		)	(54,774		)	(544		)

June 30, 2009	30			11,002			995
Additions	—			88,725			238
Reductions	—			(91,276		)	—

June 30, 2010	30			8,451			1,233
Additions	—			83,110			462
Reductions	—			(72,326		)	(250		)

June 30, 2011	$	30		$	19,235		$	1,445

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

September 9, 2011



ALPHA AND OMEGA SEMICONDUCTOR LIMITED

By:	/s/ MIKE F. CHANG
	Mike F. Chang
	Chief Executive Officer
	(Principal Executive Officer)

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POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS , that each person whose signature appears below constitutes and appoints Mike F. Chang and Ephraim Kwok, and each or any one of them, his true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitutes or substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



Signature	Title	Date
/s/ MIKE F. CHANG	Chairman of the Board and Chief Executive Officer	September 9, 2011
Mike F. Chang	(Principal Executive Officer)

/s/ EPHRAIM KWOK	Chief Financial Officer	September 9, 2011
Ephraim Kwok	(Principal Financial Officer)

/s/ YIFAN LIANG	Chief Accounting Officer	September 9, 2011
Yifan Liang	(Principal Accounting Officer)

/s/ YUEH -SE HO	Director and Chief Operating Officer	September 9, 2011
Yueh-Se Ho, Ph.D.

/s/ CHUNG TE CHANG	Director	September 9, 2011
Chung Te Chang

/s/ MARK A. STEVENS	Director	September 9, 2011
Mark A. Stevens

/s/ HOWARD M. BAILEY	Director	September 9, 2011
Howard M. Bailey

/s/ THOMAS W. STEIPP	Director	September 9, 2011
Thomas W. Steipp

/s/ RICHARD W. SEVCIK	Director	September 9, 2011
Richard W. Sevcik

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(b) Index to Exhibits:



Number	Description
3.1	Memorandum of Association of Registrant (incorporated by reference to Exhibit 3.1 from Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)
3.2	Form of Bye-Laws of the Registrant (incorporated by reference to Exhibit 3.2 from Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)
4.1	Amended and Restated Investors Rights Agreement dated as of December 29, 2006 between the Registrant and certain investors named therein (incorporated by reference to Exhibit 4.1 from Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)
4.2	Form of Common Share Certificate (incorporated by reference to Exhibit 4.2 from Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)
10.1	2000 Share Plan (incorporated by reference to Exhibit 10.1 from Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)
10.2	Form of Option Agreement under 2000 Share Plan (incorporated by reference to Exhibit 10.2 from Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)
10.3	2009 Share Option/Share Issuance Plan (incorporated by reference to Exhibit 10.3 from Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)
10.4	Form of Option Agreement under 2009 Share Plan (incorporated by reference to Exhibit 4.4 from Annual Report on Form 20-F (File No. 001-34717) filed with the Commission on September 2, 2010)
10.5	Form of Restricted Share Unit Issuance Agreement under 2009 Share Plan (incorporated by reference to Exhibit 4.5 from Annual Report on Form 20-F (File No. 001-34717) filed with the Commission on September 2, 2010)
10.6	Employee Share Purchase Plan (incorporated by reference to Exhibit 10.15 from Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)
10.7	Technology License Agreement dated as of July 20, 2005 between the Registrant and Agape Package Manufacturing Limited (incorporated by reference to Exhibit 10.5 Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)
10.8	Amendment No. 1 to Technology License Agreement dated as of July 16, 2010 between the Registrant and Agape Package Manufacturing Limited (incorporated by reference to Exhibit 4.8 from Annual Report on Form 20-F (File No. 001-34717) filed with the Commission on September 2, 2010)
10.9††	Foundry Agreement dated as of January 10, 2002 between the Registrant and Shanghai Hua Hong NEC Electronics Company, Limited (incorporated by reference to Exhibit 10.16 from Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)
10.10††	First Addendum to Foundry Service Agreement dated as of August 1, 2005 between the Registrant and Shanghai Hua Hong NEC Electronics Company, Limited (incorporated by reference to Exhibit 10.17 from Registration Statement on Form F-1 (File No. 333-165823) initially filed with the Commission on March 31, 2010)
10.11††	Second Addendum to Foundry Service Agreement dated as of April 11, 2007 between the Registrant and Shanghai Hua Hong NEC Electronics Company, Limited (incorporated by reference to Exhibit 10.18 from Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)

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10.12††	Foundry Service Agreement dated as of November 2, 2009 between Alpha & Omega Semiconductor (Macau), Ltd. and Shanghai Hua Hong NEC Electronics Company, Limited (incorporated by reference to Exhibit 10.6 from Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)
10.13	Non-Exclusive Distributor Agreement dated as of July 27, 2010 between Alpha & Omega Semiconductor (Hong Kong) Limited and Frontek Technology Corporation (incorporated by reference to Exhibit 4.17 from Annual Report on Form 20-F (File No. 001-34717) filed with the Commission on September 2, 2010)
10.14†††	Supplement to Non-Exclusive Distributor Agreement dated as of July 27, 2010 between Alpha & Omega Semiconductor (Hong Kong) Limited and Frontek Technology Corporation (incorporated by reference to Exhibit 4.18 from Annual Report on Form 20-F (File No. 001-34717) filed with the Commission on September 2, 2010)
10.15*†	First Amendment of Supplement to Distribution Agreement dated as of April 21, 2011 between Alpha & Omega Semiconductor (Hong Kong) Limited and Frontek Technology Corporation
10.16	Non-Exclusive Distributor Agreement dated as of July 27, 2010 between Alpha & Omega Semiconductor (Hong Kong) Limited and Promate Electronic Co., Ltd. (incorporated by reference to Exhibit 4.19 from Annual Report on Form 20-F (File No. 001-34717) filed with the Commission on September 2, 2010)
10.17††	Supplement to Non-Exclusive Distributor Agreement dated as of July 27, 2010 between Alpha & Omega Semiconductor (Hong Kong) Limited and Promate Electronic Co., Ltd. (incorporated by reference to Exhibit 4.20 from Annual Report on Form 20-F (File No. 001-34717) filed with the Commission on September 2, 2010)
10.18*†	First Amendment of Supplement to Distribution Agreement dated as of April 21, 2011 between Alpha & Omega Semiconductor (Hong Kong) Limited and Promate Electronic Co., Ltd.
10.19††	Settlement and Cross License Agreement dated as of October 17, 2008 among the Registrant, Alpha and Omega Semiconductor Incorporated, Fairchild Semiconductor Corporation, and Fairchild Semiconductor International, Inc. (incorporated by reference to Exhibit 10.12 from Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)
10.20	Lease dated as of December 23, 2009 between Alpha and Omega Semiconductor Incorporated and OA Oakmead II, LLC (incorporated by reference to Exhibit 10.19 from Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)
10.21	Guarantee dated as of January 5, 2010 between the Registrant and OA Oakmead II, LLC (incorporated by reference to Exhibit 10.20 from Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)
10.22*	Option Agreement dated as of October 1, 2010 between the Registrant and Integrated Device Technology, Inc.
10.23*	Share Purchase Agreement dated as of November 30, 2010 between the Registrant, the common shareholders of APM, Min Juang as representative and Agape Package Manufacturing Ltd.
10.24*	Share Purchase Agreement dated as of November 30, 2010 between the Registrant, the preferred shareholders of APM, Ben Yang as representative and Agape Package Manufacturing Ltd.
10.25	Form of Indemnification Agreement (incorporated by reference to Exhibit 10.11 from Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)
10.26	Form of Employment Agreement between the Registrant and Mike F. Chang (incorporated by reference to Exhibit 10.13 from Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)
10.27	Form of Retention Agreement (incorporated by reference to Exhibit 10.14 from Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)

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10.28	Form of Restricted Shares Purchase Agreement (incorporated by reference to Exhibit 10.21 from Registration Statement on Form F-1 (File No. 333-165823) filed with the Commission on March 31, 2010)
10.29*	Summary of 2010 Executive Incentive Plan
10.30*	Summary of 2011 Executive Incentive Plan
21.1*	List of Subsidiaries of the Registrant
23.1*	Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm of Registrant
31.1*	Certification of Chief Executive Officer required by Rule 13(a)-14(a) under the Exchange Act
31.2*	Certification of Chief Financial Officer required by Rule 13(a)-14(a) under the Exchange Act
32.1*	Certification of Chief Executive Officer required by Rule 13a-14(b) under the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code
32.2*	Certification of Chief Financial Officer required by Rule 13a-14(b) under the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code

* Filed with this Annual Report on Form 10-K.

† Confidential treatment has been requested with respect to certain portions of this document and the omitted portions have been filed separately with the Securities and Exchange Commission.

†† Confidential treatment has been granted for certain information contained in this document pursuant to an order of the Securities and Exchange Commission. Such information has been omitted and filed separately with the Securities and Exchange Commission.

††† An extension for a previous order granting confidential treatment has been requested for certain portion of this document and the omitted portions have been filed separately with the Securities and Exchange Commission.

Exhibit 10.15

NOTE: Portions of this Exhibit are the subject of a Confidential Treatment Request by the Registrant to the Securities and Exchange Commission (the “Commission”). Such portions have been redacted and are marked with a “[***]” in the place of the redacted language. The redacted information has been filed separately with the Commission.

First Amendment of Supplement to Distribution Agreement

This is an Amendment to the Supplement to Distribution Agreement dated July 27, 2010 (“the Agreement”) between Alpha & Omega Semiconductor (Hong Kong) Limited (“AOS”) and Frontek Technology Corporation (the “Distributor”). This Amendment will come into effect from April 21, 2011 (“Effective Date”) after it is duly signed by both parties. All expressions not defined here shall have the same meaning as they have in the Agreement. Except to the extent modified by this Amendment, all provisions of the Agreement shall remain in effect. The parties agree following amendments to the Agreement:

Revise the “Stock Rotation Program 2)”

From:

“Stock Rotation dollar amount is limited up to [***] guarantee and [***] AOS discretionary of net billings for the current three-month period.”

To:

“Stock Rotation dollar amount is limited up to [***] guarantee and [***] AOS discretionary, conditioned upon Distributor's adhering to AOS's backlog and inventory management guidelines as below:


i)	Distributor maintains backlog within a 4 month window (unless otherwise approved by AOS in writing) with minimal pull-ins and push-outs (by CRD);


ii)	Distributor plans backlog to achieve 2 month inventory target based on customer's POS forecast;


iii)	Products that were grossly over-ordered will not be eligible for the [***] AOS discretionary Stock Rotation. ”

AOS Distributor

By: /s/ Phil Lee By: /s/ Frontek Technology Corporation

Name & Title: Phil Lee, General Manager Name & Title: Jack Wu, Chairman

***CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION***

Exhibit 10.18

----------------------------------------------------------------------------------------------------------------------------------------------

First Amendment of Supplement to Distribution Agreement

This is an Amendment to the Supplement to Distribution Agreement dated July 27, 2010 (“the Agreement”) between Alpha & Omega Semiconductor (Hong Kong) Limited (“AOS”) and Promate Electronic Co., Ltd. (the “Distributor”). This Amendment will come into effect from April 21, 2011 (“Effective Date”) after it is duly signed by both parties. All expressions not defined here shall have the same meaning as they have in the Agreement. Except to the extent modified by this Amendment, all provisions of the Agreement shall remain in effect. The parties agree following amendments to the Agreement:

Revise the “Stock Rotation Program 2)”

From:

“Stock Rotation dollar amount is limited up to [***] guarantee and [***] AOS discretionary of net billings for the current three-month period.”

To:

“Stock Rotation dollar amount is limited up to [***] guarantee and [***] AOS discretionary, conditioned upon Distributor's adhering to AOS's backlog and inventory management guidelines as below:


i)	Distributor maintains backlog within a 4 month window (unless otherwise approved by AOS in writing) with minimal pull-ins and push-outs (by CRD);


ii)	Distributor plans backlog to achieve 2 month inventory target based on customer's POS forecast;


iii)	Products that were grossly over-ordered will not be eligible for the [***] AOS discretionary Stock Rotation. ”

AOS Distributor

By: /s/ Phil Lee By: /s/ C.L.Hsieh

Name & Title: Phil Lee, General Manager Name & Title: C.L. Hsieh, VP

***CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION***

Exhibit 10.22

OPTION AGREEMENT

This Option Agreement (this “ Agreement ”) is made as of October 1, 2010 (the “ Effective Date ”), by and between Alpha and Omega Semiconductor Limited, a Bermuda limited liability exempted company (“ AOS ”), and Integrated Device Technology, Inc., a Delaware corporation (the “ Company ”).

RECITALS

A. The Company owns and operates a 200mm semiconductor manufacturing facility, associated campus (including a production facility, test facility, in-house failures analysis facility and administrative office space), and the real property thereunder, located at 3131 NE Brookwood Parkway, Hillsboro, Oregon (the “ Facility ”).

B. Alpha & Omega Semiconductor (Macau), Ltd., a Macau company and wholly owned subsidiary of AOS (“ AOS (Macau) ”) and Alpha and Omega Semiconductor (Cayman) Ltd., a Cayman Islands company and wholly owned subsidiary of AOS (“ AOS (Cayman )”), is entering into that certain Foundry Service Agreement dated as of the date hereof (the “ Foundry Agreement ”) pursuant to which the Company will provide engineering and manufacturing services to AOS (Macau) and AOS (Cayman) and their respective affiliates through the Facility.

C. To induce AOS (Macau) and AOS (Cayman) to enter into the Foundry Agreement and in consideration of the Option Premium (as defined below), the Company has agreed to grant AOS an option to acquire the Facility and certain assets directly related to and necessary for the operation of the Facility constituting the Purchased Assets (as defined in the Asset Purchase Agreement) and for the avoidance of doubt, excluding the Excluded Assets (as defined in the Asset Purchase Agreement) (the “ Purchased Assets ”) and to assume certain liabilities of the Company (the “ Asset Purchase ”) pursuant to an Asset Purchase Agreement in the form attached hereto as Exhibit A (the “ Asset Purchase Agreement ”) on the terms and subject to the conditions set forth herein and therein.

AGREEMENT

The parties agree as follows:

1. Purchase Option . In consideration of AOS (Macau) and AOS (Cayman) entering into the Foundry Agreement and a cash payment of $5,000,000 (the “ Option Premium ”) the Company hereby grants to AOS the option to acquire the Purchased Assets and to assume certain liabilities of the Company pursuant to the Asset Purchase Agreement for $26,000,000 in cash (subject to adjustment pursuant to the Asset Purchase Agreement, the “ Purchase Price ”) on the terms and subject to the conditions set forth herein and therein (the “ Option ”). Unless the Company specifies otherwise, AOS shall pay or AOS shall cause to be paid the Option Premium by wire transfer of immediately available funds to the Company upon the execution of this Agreement. The operative

provisions of this Agreement will not become effective until the Company receives the Option Premium.

(a) AOS may exercise the Option during the period commencing on 12:00 a.m. Pacific time on September 1, 2011 and ending on 11:59 p.m. Pacific time on November 15, 2011 (the “ Option Period ”) by delivering written notice to the Company (the “ Option Notice ”).

(b) Following the delivery of the Option Notice (the “ Notice Date ”) by AOS to the Company:

(i) AOS shall have the right to obligate the Company to enter into the Asset Purchase Agreement concurrently with AOS’s execution of the Asset Purchase Agreement and, subject to the terms in this Agreement and the Asset Purchase Agreement and the satisfaction of the conditions to the Company’s obligations to close the transactions contemplated by the Asset Purchase Agreement, consummate the Asset Purchase.

(ii) The Company (i) shall provide such updated due diligence and other information as AOS shall reasonably and timely request and (ii) shall deliver to AOS an updated Draft Disclosure Schedule (as defined below) (the “ Updated Disclosure Schedule ”) with respect to the representations and warranties of the Company in the Asset Purchase Agreement, in each instance as soon as practicable following the Notice Date, and with respect to clause (i), in no event later than the later of the tenth (10th) business day following (x) the Notice Date and (y) the date of request by AOS of such updated due diligence or other information and (ii) with respect to clause (ii), in no event later than the tenth (10th) business day following the Notice Date;

(iii) The Company and AOS shall use commercially reasonable efforts to enter into and make effective the Asset Purchase Agreement within the twenty (20) business day period following the Notice Date, with any modifications mutually agreed upon by the Company and AOS (it being understood that if changes are required to reflect changes in applicable legal requirements, the parties will negotiate in good faith such changes considering the spirit and substance of the Asset Purchase Agreement).

(iv) The Company and AOS shall use commercially reasonable efforts to consummate the Closing (as defined in the Asset Purchase Agreement) by January 31, 2012.

(i) AOS’s obligations to enter into the Asset Purchase Agreement are subject to AOS’s sole discretion based upon its review of the content of any draft Updated Disclosure Schedule delivered to AOS by the Company pursuant to this Agreement; and

(ii) in the event the Company and AOS enter into the Asset Purchase Agreement, AOS may only terminate the Asset Purchase Agreement in accordance with and pursuant to the terms of the Asset Purchase Agreement.

2. Exclusivity .

(a) The Company agrees that from the date hereof of until 11:59 p.m. Pacific time on November 15, 2011 (as extended pursuant to this Section 2(a), the “ Expiry Date ”), the Company shall not, and shall direct its directors, officers, agents, employees and affiliates (collectively, “ Representatives ”) not to, directly or indirectly:

(i) initiate, solicit, facilitate, seek, knowingly encourage or induce, directly or indirectly, any inquiries or the making or implementation of any proposal or offer (including, without limitation, any proposal or offer to its stockholders or any of them) from any person other than AOS and its respective affiliates with respect to the sale or disposition of (x) all or substantially all of the Facility or (y) any individual item that constitutes a portion of the Purchased Assets and has a value in excess of $100,000 (other than disposition in accordance with Section 11(e) or replacement in accordance with Section 11(f)) at the Company’s discretion with substantially equivalent assets in good working condition or repair in the ordinary course of operations) pursuant to a merger, acquisition, consolidation, recapitalization, liquidation, dissolution, equity investment or similar transaction (any such proposal or offer being hereinafter referred to as a “ Competing Company Transaction ”);

(ii) engage in any negotiations concerning, or provide any confidential information or data to, or have any substantive discussions with, any person other than AOS and its respective affiliates relating to a Competing Company Transaction; or

(iii) enter into or consummate any agreement or understanding with any person relating to a Competing Company Transaction;

provided that if AOS exercises the Option in accordance with the terms of this Agreement during the Option Period, the Expiry Date shall be the earliest of (i) the date that the Asset Purchase Agreement is fully executed and becomes effective, and (ii) twenty (20) business days after the expiration of the Option Period.

(b) The Company shall immediately cease and terminate, and it shall cause its subsidiaries and its and their respective Representatives immediately to cease and terminate, any existing activities, including discussions or negotiations with any parties other than AOS and its respective affiliates conducted heretofore with respect to any Competing Company Transaction. The Company represents and warrants that AOS will not incur any liability to any third party by virtue of the execution of this Agreement or the termination of such activities, discussions and negotiations, and shall indemnify AOS in connection with the defense of any such claim.

(c) The Company shall promptly notify AOS if any inquiries, proposals or offers related to a Competing Company Transaction are received by, any confidential information or data is requested from, or any negotiations or discussions related to a Competing Company Transaction are sought to be initiated or continued with, it or any of its subsidiaries or any of their respective Representatives.

(d) AOS agrees that from the date hereof of until the Expiry Date, AOS shall not, and shall direct their respective Representatives not to, directly or indirectly:

(i) initiate, solicit, facilitate, seek, make or implement, directly or

indirectly, any proposal or offer concerning or related to the acquisition of any wafer fabrication facility other than the Facility (any such proposal or offer being hereinafter referred to as a “ Competing AOS Transaction ”), whether by merger, acquisition, consolidation, purchase of assets, exclusive license, joint venture formation, equity investment, business combination or otherwise;

(ii) engage in any negotiations concerning, or have any substantive discussions with, any person relating to a Competing AOS Transaction; or

(iii) enter into or consummate any agreement or understanding with any person relating to a Competing AOS Transaction.

(e) AOS shall immediately cease and terminate, and it shall cause its subsidiaries and its and their respective Representatives immediately to cease and terminate, any existing activities, including discussions or negotiations with any parties conducted heretofore with respect to any Competing AOS Transaction. AOS represents and warrants that the Company will not incur any liability to any third party by virtue of the execution of this Agreement or the termination of such activities, discussions and negotiations, and shall indemnify the Company in connection with the defense of any such claim.

(f) AOS shall promptly notify the Company if any inquiries, proposals or offers related to, or which reasonably could lead to, a Competing AOS Transaction are received by, any confidential information or data is provided to, or any negotiations or discussions related to a Competing AOS Transaction are sought to be initiated or continued with, it or any of its subsidiaries or any of their respective Representatives.

3. Delivery of Seller Disclosure Schedules . Attached hereto as Exhibit B is a draft Seller Disclosure Schedule (as defined in the Asset Purchase Agreement) as of the date of this Agreement in respect of the representations and warranties in the Asset Purchase Agreement (the “ Draft Disclosure Schedule ”). For the purposes of the Draft Disclosure Schedule or any Updated Disclosure Schedule delivered to AOS pursuant to this Agreement, the term “Purchased Assets” in the Asset Purchase Agreement shall be deemed to have the meaning of “Purchased Assets” as set forth in this Agreement; provided that such Draft Disclosure Schedule or any Updated Disclosure Schedule may provide a general description of certain Purchased Assets that are ancillary to the wafer fabrication operations taking place at the Facility.

4. Option Premium . In the event AOS exercises the Option during the Option Period and the Closing is consummated pursuant to the Asset Purchase Agreement, the Purchase Price shall be reduced by the amount of the Option Premium as set forth in the Asset Purchase Agreement.

5. Refund of Option Premium . In the event that the Company materially breaches its obligations set forth in Section 11 of this Agreement or there has occurred a Material Adverse Change (as defined below) (each, a “ Material Breach ”), after AOS has provided written notice of such Material Breach to the Company and such Material Breach has not been cured within twenty (20) business days after delivery of such written notice (the “ Cure Period ”), AOS shall become entitled to the refund (and shall receive within ten (10) business days following the end of such Cure Period) from the Company of an amount in cash equal to the Option Premium. As used herein,

“Material Adverse Change” means any event, occurrence, fact, condition or change that has resulted in, or would reasonably be expected to result in, individually or in the aggregate, a material adverse change to the condition of the Purchased Assets as a whole; provided that any such event, occurrence, fact, condition or change which relate to or is attributable to the conduct of AOS following the Effective Date, including without limitation any actions taken in connection with the Foundry Agreement, shall not be deemed a Material Adverse Change.

6. Confidentiality . The parties hereto acknowledge that AOS and the Company have previously executed a Confidential Letter of Intent dated August 6, 2010 (the “ Confidentiality Agreement ”) which contains binding provisions regarding confidentiality, which shall continue in full force and effect in accordance with its terms. Except as expressly authorized in writing by the other party hereto, or as otherwise required by law, under no circumstance shall any party hereto (or any of such party’s Representatives) discuss or disclose the existence or terms of this Agreement, the Option or the Ancillary Agreements (as defined in the Asset Purchase Agreement) with or to any third party, other than to such legal, accounting and financial advisors who have a need to know such information solely for purposes of assisting the parties regarding the proposed acquisition and the parties hereto agree to maintain the confidentiality of such information. In the event any party is requested or legally required to disclose the existence of this Agreement, the Option or the Ancillary Agreements, the disclosing party shall provide the other party with prompt written notice of that fact and shall use commercially reasonable efforts to consult with the other party regarding the disclosure. The disclosing party shall, as applicable, make commercially reasonable efforts to seek confidential treatment where such treatment may in good faith be sought under applicable laws and regulations or provide reasonable assistance to the other party in seeking a protective order.

7. Cooperation . Upon AOS’s exercise of the Option and until the Closing, and notwithstanding the Company’s obligations under Section 6 herein, the Company shall use commercially reasonable efforts to cooperate with and assist AOS in its efforts to negotiate those agreements with third party vendors and suppliers set forth in Section 4.14 of the Draft Disclosure Schedule that are necessary for the conduct and operation of the Facility and the use of the Purchased Assets by AOS following the Closing in the same manner as conducted, operated and used by the Company as of the Closing. For purposes of clarification, the Company’s cooperation and assistance in accordance with this Section 7 is expressly permitted by AOS and shall not violate the Company’s obligations under Section 6 herein.

8. Representations and Warranties of the Company . The Company represents and warrants to AOS as of the date hereof:

(a) The Company has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and no further corporate action is required on the part of the Company to authorize this Agreement and the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and constitutes the valid and binding obligation of the Company enforceable against it in accordance with its terms, except as such enforceability may be limited by principles of public

policy and subject to the laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies.

(b) The execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby, will not contravene, conflict with or result in any violation of or default under (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation, modification or acceleration of any obligation or loss of any benefit, result in the creation or imposition of any lien under or impair the Company’s rights or alter the rights or obligations of a third party under (any such event, a “ Conflict ”) (i) any provision of the Company’s certificate of incorporation or bylaws, as amended, (ii) any material mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise or license to which the Facility is subject and which have been filed as an exhibit to the Company’s most recently filed Annual Report on Form 10‑K (the “ Company 10‑K ”), and such other filings under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), which are made subsequent to the Company 10‑K and prior to the date hereof or (c) any material judgment, injunction, order, decree, statute, law, ordinance, rule or regulation applicable to the Facility.

(c) Except for Intellectual Property Rights or Technology owned by a third party and used by the Company for its own semiconductor manufacturing operations at the Facility and the rights provided pursuant to the Intellectual Property License Agreement, the Facility and the other Purchased Assets constitute all tangible assets, Technology (as defined in Asset Purchase Agreement) and Intellectual Property Rights (as defined in Asset Purchase Agreement) necessary for the operation of the Facility and the use of the Purchased Assets as conducted by the Company for its own semiconductor manufacturing operations at the Facility as of the Effective Date.

(d) The tangible assets and properties which are part of the Purchased Assets listed or described in the Asset Purchase Agreement attached as an exhibit hereto (including the schedules thereto) constitute the tangible assets and properties to be acquired pursuant to the Asset Purchase Agreement after AOS’s exercise of the option subject to (i) any dispositions of Purchased Assets in accordance with Section 11(e), and (ii) repair or replacement, in accordance with Section 11(f), with a substantially equivalent asset at the Company’s discretion in good working condition and such Purchased Assets are in normal operating condition and repair (with the exception of normal wear and tear) and, other than minor defects, are fit for use in the ordinary course of operations of the Facility and the Purchased Assets as carried on by the Company as of the Effective Date in all material respects.

(e) The Company has used commercially reasonable efforts to prepare an accurate and complete Draft Disclosure Schedule and, to the Company’s knowledge, the Draft Disclosure Schedule is accurate, correct and complete in all material respects assuming for purposes herein that the Asset Purchase Agreement was being executed as of the date hereof.

9. Representations and Warranties of AOS . AOS represents and warrants to the Company as of the date hereof:

(a) AOS has all requisite corporate power and authority to enter into this

Agreement and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of AOS, and no further corporate action is required on the part of AOS to authorize this Agreement and the transactions contemplated hereby. This Agreement has been duly executed and delivered by AOS, and constitutes the valid and binding obligations of AOS, enforceable against AOS in accordance with its terms, except as such enforceability may be limited by principles of public policy and subject to the laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies.

(b) The execution, delivery and performance by AOS of this Agreement do not, and the consummation of the transactions contemplated hereby will not, result in any Conflict with (i) any provision of the certificate of incorporation or bylaws of AOS, as amended, (ii) any material mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise or license to which AOS or any of its respective properties or assets are subject and which have been filed as an exhibit to AOS’s registration statement on Form F-1, as amended (the “ AOS F-1 ”), and filings under the Exchange Act which are made subsequent to the AOS F-1 and prior to the date hereof, or (iii) any material judgment, injunction, order, decree, statute, law, ordinance, rule or regulation applicable to AOS or its respective properties (whether tangible or intangible) or assets.

(c) AOS will have, or in the event a subsidiary of AOS is designated by AOS to purchase the Purchased Assets AOS will cause such subsidiary to have, sufficient financial resources to pay the Purchase Price upon the Closing. Immediately prior to and immediately following the consummation of the Closing, AOS will not be insolvent or subject to any safeguard, bankruptcy or insolvency proceedings, nor to any other proceedings with regard to the prevention or resolution of business difficulties nor in any situation likely to result in such proceedings.

10. Financial Covenant of AOS . AOS shall maintain financial resources in a manner such that (a) it will have sufficient financial resources to pay or cause to be paid the Purchase Price upon the Closing and (b) immediately prior to and immediately following the consummation of the Closing, AOS will not be insolvent or subject to any safeguard, bankruptcy or insolvency proceedings, nor to any other proceedings with regard to the prevention or resolution of business difficulties nor in any situation likely to result in such proceedings.

11. Covenants of the Company . Until this Agreement is terminated pursuant to Section 12 below:

(a) The Company shall not consummate a Competing Company Transaction with a person other than AOS.

(b) In the event AOS delivers an Option Notice pursuant to the terms of this Agreement, the Company shall use commercially reasonable efforts to enter into and make effective the Asset Purchase Agreement.

(c) In the event AOS delivers an Option Notice pursuant to the terms of this Agreement, the Company shall use commercially reasonable efforts to consummate the Closing (as

defined in the Asset Purchase Agreement), subject to (i) the terms in this Agreement and the Asset Purchase Agreement and (ii) the satisfaction of the conditions to the Company’s obligations to close the transactions contemplated by the Asset Purchase Agreement.

(d) The Company shall use commercially reasonable efforts to continue to maintain the Facility and the Purchased Assets in normal operating condition and repair, subject to normal wear and tear in the ordinary course of business, and subject to any repairs or replacements, in accordance with Section 11(f), with substantially equivalent assets in good working condition.

(e) The Company shall not dispose of any individual item of Purchased Asset that had an original purchase price in excess of $100,000 without the written consent of AOS.

(f) In the event the Company proposes to replace any individual item of Purchased Asset that constitutes Equipment (as defined in the Asset Purchase Agreement), Equipment Part Inventory (as defined in the Asset Purchase Agreement) or any other fixed asset, in each case that had an original purchase price in excess of $100,000, the Company shall provide AOS with written notice of such replacement.

(g) The Company shall not adopt or propose any amendment to its certificate of incorporation or bylaws that would reasonably be expected to delay the consummation of the transactions contemplated by this Agreement.

(h) The Company shall not intentionally or willfully materially breach its obligations in the Foundry Agreement. For the purposes of this Section 11(h), the Company shall only be deemed to have breached its obligations “intentionally” or “willfully” if the Company had actual knowledge at the time of taking an action or omitting to take an action, that such action or omission constituted a breach of the Company’s obligations under the Foundry Agreement.

12. Termination . This Agreement shall terminate and the Option shall expire upon the earliest of (a) the Expiry Date, (b) 5:00 p.m. Pacific time on May 1, 2011 if AOS has not complied with its obligations pursuant to Section 8.2 of the Foundry Agreement by such time, (c) upon the termination of the Foundry Agreement by the Company pursuant to Section 13.2 therein, (d) a date mutually agreed upon in writing the Company and AOS and (e) upon execution of the Asset Purchase Agreement by AOS and the Company; provided, that if AOS and the Company enter into the Asset Purchase Agreement, Section 7 and Section 11(c) shall continue in effect until the termination of the Asset Purchase Agreement pursuant to the terms thereof or the Closing.

13. Effect of Termination . Upon the termination of this Agreement pursuant to Section 12, no party will have any obligation or other liability to any other party; provided that in the event that the Company is obligated to make a payment to AOS in the amount of the Option Premium pursuant to Section 5, such obligation shall continue until such amount is paid by the Company. The Confidentiality Agreement shall be terminated upon the termination of this Agreement; provided, however the confidentiality obligations under the section titled “Confidentiality” shall continue for twenty-four (24) months following such termination.

14. Further Assurances . Subject to the terms and conditions set forth in this Agreement,

from time to time after the date hereof (including during the Option Period), the Company will use commercially reasonable efforts, as promptly as practicable, to take or cause to be taken all actions, and to do or cause to be done all other things, as are necessary, proper, or advisable to consummate and make effective the transactions completed by this Agreement and the Asset Purchase Agreement.

15. Specific Performance . AOS and the Company agree that (i) money damages would not adequately compensate a party for any failure to perform any obligations set forth in this Agreement, (ii) the terms of this Agreement shall be specifically enforceable and (iii) in any action to specifically enforce the terms hereof, any person against whom such action or proceeding is brought hereby waives the claim or defense that such party has an adequate remedy at law and shall not offer in any such action or proceeding the claim or defense that such remedy at law exists; provided that, notwithstanding anything to the contrary elsewhere in this Agreement, in the event of a Material Adverse Change resulting from any changes or effects arising in connection with any acts of God, calamities, acts of war, terrorism or military action or the escalation thereof, the sole and exclusive remedy of AOS shall be the refund of the Option Premium pursuant to Section 5.

16. Governing Law . This Agreement shall be governed in all respects by the laws of the State of California without regard to choice of laws or conflict of laws provisions thereof.

17. Notices . All notices and other communications hereunder shall be in writing and shall be deemed duly delivered: (a) upon receipt if delivered personally; (b) three (3) business days after being mailed by registered or certified mail, postage prepaid, return receipt requested; (c) one (1) business day after it is sent by commercial overnight courier service; or (d) upon transmission if sent via facsimile with confirmation of receipt to the parties at the following address (or at such other address for a party as shall be specified upon like notice:

(a) If to AOS, to:

Alpha and Omega Semiconductor Limited
475 Oakmead Parkway

Sunnyvale, CA 94085
Attn: Chief Financial Officer
Fax: (408) 830-9749

with a copy to (which copy shall not constitute notice):

Morgan Lewis and Bockius LLP
2 Palo Alto Square, Suite 700

300 El Camino Real
Palo Alto, CA 94306
Attn: Lucas Chang

Fax: (650) 843-4001

If to the Company, to:

Integrated Device Technology, Inc.

6024 Silver Creek Valley Road
San Jose, CA 95138
Attention: General Counsel
Fax: (408) 284-8454

with a copy (which shall not constitute notice) to:

Latham & Watkins LLP

140 Scott Drive
Menlo Park, CA 94025
Attention: Mark V. Roeder, Esq.
Fax: (650) 463-2600

18. Successors and Assigns . No party’s rights and obligations under this Agreement may be transferred or assigned directly or indirectly (whether by merger, consolidation or otherwise) without the prior written consent of the other party; provided , that AOS may assign its rights and obligations under this Agreement to (a) an affiliate of AOS or (b) a person or entity into which it is merged or which has otherwise succeeded to all or substantially all of its business and assets by merger, reorganization or otherwise, and which has assumed in writing or by operation of law its obligations under this Agreement. Subject to the foregoing sentence, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns.

19. Entire Agreement . This Agreement, together with the Ancillary Agreements (as defined in the Asset Purchase Agreement), constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersedes all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof and thereof.

20. Amendment and Waiver . Any amendment or waiver of any of the terms or conditions of this Agreement must be in writing and must be duly executed by or on behalf of the party to be charged with such waiver. The failure of a party to exercise any of its rights hereunder or to insist upon strict adherence to any term or condition hereof on any one occasion shall not be construed as a waiver or deprive that party of the right thereafter to insist upon strict adherence to the terms and conditions of this Agreement at a later date. Further, no waiver of any of the terms and conditions of this Agreement shall be deemed to or shall constitute a waiver of any other term of condition hereof (whether or not similar).

21. Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of applicable law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated herein are not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated herein be consummated as originally contemplated to the fullest extent possible.

22. Counterparts . This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.

[Remainder of this Page Intentionally Left Blank]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

THE COMPANY:

INTEGRATED DEVICE TECHNOLOGY, INC.

By: /s/ Ted Tewksbury

Name: Ted Tewksbury

Its: President and Chief Executive Officer

AOS:

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

By: /s/ Mike Chang

Name: Mike Chang

Its: CEO

EXHIBIT A

FORM OF ASSET PURCHASE AGREEMENT

ASSET PURCHASE AGREEMENT

dated as of [ . ], 2011

between

Alpha and Omega Semiconductor Limited,

[Alpha and Omega Semiconductor (New Co.) Incorporated] and

Integrated Device Technology, Inc.

TABLE OF CONTENTS

		Page
ARTICLE I	DEFINITIONS	1
1.1	Definitions	1
1.2	Other Defined Terms	6

ARTICLE II	PURCHASE AND SALE OF THE SHARES	9
2.1	Purchase and Sale of the Purchased Assets	9
2.2	Excluded Assets	10
2.3	Assumed Liabilities	11
2.4	Excluded Liabilities	11
2.5	Purchase Price	12
2.6	Purchase Price Adjustment	12
2.7	Allocation	13
2.8	Consents	14

ARTICLE III	CLOSING	14
3.1	Closing Date	14
3.2	Deliveries by Seller at the Closing	15
3.3	Deliveries by Buyer at the Closing	15
3.4	Guarantee	16

ARTICLE IV	REPRESENTATIONS AND WARRANTIES OF SELLER	16
4.1	Organization and Good Standing	17
4.2	Authority and Enforceability	17
4.3	No Conflicts; Consents	17
4.4	Equipment Part Inventory; Operational Inventory	18
4.5	Taxes	18
4.6	Compliance with Law	19
4.7	Business Authorizations	19
4.8	Title to Personal Properties	19
4.9	Condition of Tangible Assets	20
4.10	Real Property	20
4.11	Intellectual Property	21
4.12	Absence of Certain Changes or Events	22
4.13	Contracts	23
4.14	Sufficiency of Purchased Assets	24
4.15	Litigation	25
4.16	Employee Benefits	25
4.17	Labor and Employment Matters	26
4.18	Environmental	27
4.19	Insurance	`29
4.20	Suppliers	30

TABLE OF CONTENTS

		Page
4.21	Brokers or Finders	30

ARTICLE V	REPRESENTATIONS AND WARRANTIES OF BUYER	31
5.1	Organization and Good Standing	31
5.2	Authority and Enforceability	31
5.3	No Conflicts; Consents	31
5.4	Litigation	32
5.5	Availability of Funds	32
5.6	Brokers or Finders	32

ARTICLE VI	COVENANTS OF SELLER	32
6.1	Conduct of Business	32
6.2	Negative Covenants	33
6.3	Access to Information; Investigation	34
6.4	Confidentiality	34
6.5	Release of Liens	35
6.6	Consents	35
6.7	Notification of Certain Matters	35
6.8	Restrictive Covenants	35
6.9	Exclusivity	36
6.10	Vanderzanden Farms	39

ARTICLE VII	COVENANTS OF BUYER AND SELLER	36
7.1	Regulatory Approvals	36
7.2	Public Announcements	37
7.3	Employees	37
7.4	Taxes	39
7.5	Bulk Sales Laws	40
7.6	Discharge of Business Obligations After Closing	40
7.7	Access to Books and Records	40
7.8	Further Assurances	40

ARTICLE VIII	CONDITIONS TO CLOSING	41
8.1	Conditions to Obligations of Buyer and Seller	41
8.2	Conditions to Obligation of Buyer	41
8.3	Conditions to Obligation of Seller	43

ARTICLE IX	TERMINATION	44
9.1	Termination	44
9.2	Effect of Termination	45
9.3	Remedies	46

TABLE OF CONTENTS

		Page
ARTICLE X	INDEMNIFICATION	46
10.1	Survival	46
10.2	Indemnification by Seller	47
10.3	Indemnification by Buyer	48
10.4	Deduction of IDT Insurance Proceeds Received by AOS	49
10.5	Indemnification Procedures for Third Party Claims	49
10.6	Indemnification Procedures for Non-Third Party Claims	51
10.7	Escrow Fund	51
10.8	Contingent Claims	51
10.9	Effect of Investigation; Waiver	51
10.10	Remedies	52
10.11	Limitation on Damages	52

ARTICLE XI	MISCELLANEOUS	52
11.1	Notices	52
11.2	Amendments and Waivers	53
11.3	Expenses	54
11.4	Successors and Assigns	54
11.5	Governing Law	54
11.6	Consent to Jurisdiction	54
11.7	Counterparts	55
11.8	Third Party Beneficiaries	55
11.9	Entire Agreement	55
11.10	Captions	55
11.11	Severability	55
11.12	Specific Performance	55
11.13	Interpretation	56

ASSET PURCHASE AGREEMENT

ASSET PURCHASE AGREEMENT, dated as of [ • ], 2011 (the “ Asset Purchase Agreement ”), among Alpha and Omega Semiconductor Limited, a Bermuda limited liability exempted company (“ Parent ”), [Alpha and Omega Semiconductor (New Co.) Incorporated], a [ • ] corporation and wholly owned subsidiary of Parent (“ Buyer ”), and Integrated Device Technology, Inc., a Delaware corporation (“ Seller ”).

WHEREAS, Seller operates a 200mm semiconductor manufacturing facility at 3131 Northeast Brookwood Parkway, Hillsboro, Oregon, 97124-5303, USA (together with all Real Property, and all buildings, fixtures, structures, signage and improvements erected or located thereon, including production facility, in-house failure analysis and test facility and administrative offices and as further described on Schedule 1.1(a) (the “ Facility ”)); and

WHEREAS, the parties desire that Seller sell, assign, transfer, convey and deliver to Buyer, and that Buyer purchase and acquire from Seller, all of the right, title and interest of Seller in and to the Purchased Assets (as hereinafter defined), and that Buyer assume the Assumed Liabilities (as hereinafter defined), upon the terms and subject to the conditions of this Asset Purchase Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and the respective representations and warranties, covenants and agreements contained herein, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions . When used in this Asset Purchase Agreement, the following terms shall have the meanings assigned to them in this Article I or in the applicable Section of this Asset Purchase Agreement to which reference is made in this Article I.

“ Accounts Receivable ” means (a) any trade accounts receivable and other rights to payment from customers of Seller and (b) any other account or note receivable of Seller, together with, in each case, the full benefit of any security interest of Seller therein.

“ Affiliate ” means, with respect to any specified Person, any other Person directly or indirectly controlling, controlled by or under common control with such specified Person; as used in this definition, “control” means the ownership of more than fifty percent (50%) of the voting securities or other voting interest of any Person (including attribution from related parties).

“ Ancillary Agreements ” means the Escrow Agreement, the Bill of Sale, the Assignment and Assumption Agreement, the Intellectual Property License Agreement, the Special Warranty Deed, the Supply Agreement, the Transition Services Agreement, and the other agreements, instruments and documents to be delivered at the Closing.

“ Authorization ” means any authorization, approval, consent, certificate, license, permit or franchise of or from any Governmental Entity or pursuant to any Law.

“ Benefit Plan ” means (a) any “employee benefit plan” as defined in ERISA Section 3(3), including any (i) nonqualified deferred compensation or retirement plan or arrangement which is an Employee Pension Benefit Plan (as defined in ERISA Section 3(2)), (ii) qualified defined contribution retirement plan or arrangement which is an Employee Pension Benefit Plan, (iii) qualified defined benefit retirement plan or arrangement which is an Employee Pension Benefit Plan (including any Multiemployer Plan (as defined in ERISA Section 3(37))) and (iv) Employee Welfare Benefit Plan (as defined in ERISA Section 3(1)) or material fringe benefit plan or program, or (b) material stock purchase, stock option, severance pay, employment, change-in-control, vacation pay, company awards, salary continuation, sick leave, excess benefit, bonus or other incentive compensation, life insurance, or other employee benefit plan, contract, program, policy or other arrangement, whether or not subject to ERISA.

“ Books and Records ” means books of account, general, financial, warranty and shipping records, invoices for Equipment Part Inventory and Operational Inventory, supplier lists, maintenance and operating records, and other documents, records and files, in each case solely as relating to the Purchased Assets, including employee and personnel records of the Transferred Employees (excluding, for the avoidance of doubt, Tax Books and Records of Seller or its Affiliates).

“ Business Day ” means a day other than a Saturday, Sunday or other day on which banks located in San Francisco, California are authorized or required by Law to close.

“ Cap Amount ” means an amount equal to $2,600,000.

“ Capital Stock ” means (a) in the case of a corporation, its shares of capital stock, (b) in the case of a partnership or limited liability company, its partnership or membership interests or units (whether general or limited), and (c) any other interest that confers on a Person the right to receive a share of the profits and losses of, or distribution of assets, of the issuing entity.

“ Charter Documents ” means, with respect to any entity, the certificate of incorporation, the articles of incorporation, by-laws, articles of organization, limited liability company agreement, partnership agreement, formation agreement, joint venture agreement or other similar organizational documents of such entity (in each case, as amended).

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Contract ” means any written agreement, contract, license, lease, commitment, arrangement or understanding, including any purchase order to a supplier under which such supplier has not fully delivered and performed.

“ Copyrights ” means United States and foreign copyrights and rights under copyrights, whether registered or unregistered, together with any registrations and applications for registration thereof.

“ Equipment ” means machinery, fixtures, furniture, supplies, accessories, materials, equipment, parts, automobiles, tooling, tools, molds, office equipment, computers, telephones and all other items of tangible personal property, in each case solely as installed or used by Seller at the Facility.

“ Equipment Part Inventory ” means the Inventory utilized in the maintenance and repair of Equipment located at the Facility or held on consignment by third parties, other than those specifically listed as Excluded Assets.

“ ERISA ” means the Employee Retirement Income Security Act of 1974.

“ ERISA Affiliate ” means any entity which is a member of a “controlled group of corporations” with, under “common control” with or a member of an “affiliated services group” with Seller, as defined in Section 414(b), (c), (m) or (o) of the Code.

“ Facility Employee ” means any individual specifically set forth on Schedule 1.1(b) and any additional individuals hired by Seller to work exclusively at the Facility.

“ GAAP ” means generally accepted accounting principles in the United States.

“ Governmental Entity ” means any entity or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to United States federal, state, local, or municipal government, foreign, international, multinational or other government, including any department, commission, board, agency, bureau, subdivision, instrumentality, official or other regulatory, administrative or judicial authority thereof, and any non-governmental regulatory body to the extent that the rules and regulations or orders of such

body have the force of Law.

“ Indebtedness ” means any of the following: (a) any indebtedness for borrowed money, (b) any obligations evidenced by bonds, debentures, notes or other similar instruments, (c) any obligations to pay the deferred purchase price of property or services, except trade accounts payable and other current Liabilities arising in the Ordinary Course of Business, (d) any obligations as lessee under capitalized leases, (e) any indebtedness created or arising under any conditional sale or other title retention agreement with respect to acquired property, (f) any obligations, contingent or otherwise, under acceptance credit, letters of credit or similar facilities, and (g) any guaranty of any of the foregoing, in each case solely as applicable to the Purchased Assets.

“ Indemnitee ” means any Person that is seeking indemnification from an Indemnitor pursuant to the provisions of this Asset Purchase Agreement.

“ Indemnitor ” means any party hereto from which any Indemnitee is seeking indemnification pursuant to the provisions of this Asset Purchase Agreement.

“ Intellectual Property Rights ” means (a) Patents; (b) Copyrights; (c) Trademarks; (d) rights in databases and data collections (including knowledge databases, customer lists and customer databases) under the laws of the United States or any other jurisdiction, whether registered or unregistered, and any applications for registration therefor; (e) trade secrets and other rights in know-how and confidential or proprietary information (including any business plans, designs, technical data, customer data, financial information, pricing and cost information, bills of material or other similar information); (f) United States and foreign mask work rights and registrations and applications for registration thereof; (g) inventions (whether or not patentable) and improvements thereto; and (h) and all claims and causes of action arising out of or related to infringement or misappropriation of any of the foregoing.

“ Inventory ” means the raw materials, work-in-process, finished goods, supplies, spare parts and other inventories of Seller located at or used in the Facility.

“ Knowledge ” of Seller or any similar phrase means, with respect to any fact or matter, the actual knowledge of [Richard Crowley (the Chief Financial Officer), Mike Hunter (the Vice President, Worldwide Manufacturing), Vince Tortolano (Vice President and General Counsel), and Jeng Lue (Director of Fab Operations)], together with such knowledge that such individuals would reasonably be expected to discover after due investigation concerning the existence of the fact or matter in question.

“ Law ” means any statute, law (including common law), constitution, treaty, ordinance, code, order, decree, judgment, rule, regulation and any other binding requirement or determination of any Governmental Entity.

“ Liabilities ” means liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.

“ Licensed Intellectual Property ” has the meaning as defined in the Intellectual Property License Agreement.

“ Lien ” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, adverse claim, encroachment or other encumbrance in respect of such property or asset.

“ Operational Inventory ” means all Inventory located at the Facility and which are not, or are not components of, work-in-progress or finished goods, other than Inventory specifically listed as Excluded Assets.

“ Option Premium ” means the option premium in the amount of five million Dollars ($5,000,000) paid by Buyer to Seller on October 1, 2010 pursuant to the Option Agreement.

“ Order ” means any award, injunction, judgment, decree, order, ruling, subpoena or verdict or other decision issued, promulgated or entered by or with any Governmental Entity of competent jurisdiction.

“ Ordinary Course of Business ” or “ Ordinary Course ” or any similar phrase shall mean the ordinary course of business in respect of the operation of the Purchased Assets at the Facility consistent with Seller’s past practice.

“ Patents ” means United States and foreign patents and patent applications and registered design and registered design applications and disclosures relating thereto (and any patents that issue as a result of those patent applications), and any renewals, reissues, reexaminations, extensions, continuations, continuations-in-part, divisions and substitutions relating to any of the patents and patent applications.

“ Permitted Liens ” means (a) Liens for current Taxes not yet due and payable (or being contested in good faith and for which reserves have been established in accordance with GAAP), (b) purchase money liens and liens securing rental payments under operating lease arrangements set forth in Section 4.13 of the Seller Disclosure Schedule, (c) Liens that are immaterial in character, amount, and extent, (d) Liens which do not materially detract from the value or interfere with the present use of the Purchased Assets in any material respect, (e) Liens created by or resulting from the actions of Buyer and (f) Liens reflected on the title policies contemplated by Section 8.2(g) hereof.

“ Person ” means an individual, a corporation, a partnership, a limited liability company, a trust, an unincorporated association, a Governmental Entity or any other entity or body.

“ Pre-Closing Environmental Liabilities ” means Liabilities arising out of the ownership or operation of the Facility or use of the other Purchased Assets at any time on or prior to the Closing, in each case to the extent based upon or arising out of (i) Environmental Law, (ii) a failure to obtain, maintain or comply with any Environmental Permit, (iii) a Release

of any Hazardous Substance, or (iv) the use, generation, storage, transportation, treatment, sale or other off-site disposal of Hazardous Substances.

“ Software ” shall mean computer software, programs and databases in any form, including web content, source code, executable code, tools, developers kits, utilities, graphical user interfaces, menus, images, icons, and forms, and all versions, updates, corrections, enhancements and modifications thereof, and all related documentation, developer notes, comments and annotations related thereto.

“ Subsidiary ” or “ Subsidiaries ” means, with respect to any party, any Person, of which (i) such party or any other Subsidiary of such party is a general partner (excluding partnerships, the general partnership interests of which held by such party or any Subsidiary of such party do not have a majority of the voting interest in such partnership) or (ii) at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such Person is directly or indirectly owned or controlled by such party and/or by any one or more of its Subsidiaries.

“ Tax ” or “ Taxes ” means any and all federal, state, local, or foreign net or gross income, gross receipts, net proceeds, sales, use, ad valorem, value added, franchise, bank shares, withholding, payroll, employment, excise, property, deed, stamp, alternative or add-on minimum, environmental, profits, windfall profits, transaction, license, lease, service, service use, occupation, severance, energy, unemployment, social security, workers’ compensation, capital, premium, and other taxes, assessments, customs, duties, fees, levies, or other governmental charges of any nature whatever, whether disputed or not, together with any interest, penalties, additions to tax, or additional amounts with respect thereto.

“ Tax Returns ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof, required to be filed with any Taxing Authority.

“ Taxing Authority ” means any Governmental Entity having jurisdiction with respect to any Tax.

“ Technology ” shall mean tangible embodiments of the Intellectual Property Rights, whether in electronic, written or other media, including Software, technical documentation, specifications, product designs or layouts, product design technology, bills of material, build instructions, test reports, schematics, algorithms, integrated circuit topographies, design files, application programming interfaces, user interfaces, test vectors, reference designs, photomasks, mask sets, routines, formulae, databases, processes, prototypes, process technology recipes, manufacturing process flows, samples, studies or other know-how and other works of authorship.

“Trademarks” means United States and foreign trademarks, service marks, trade dress, logos, trade names and corporate names, whether registered or unregistered, and the goodwill associated therewith, together with any registrations and applications for registration

thereof.

“ WARN Act ” means the Worker Adjustment and Retraining Notification Act of 1988.

“ $ ” means United States dollars.

1.2 Other Defined Terms . The following terms have the meanings assigned to such terms in the Sections of the Asset Purchase Agreement set forth below:



Accounting Principles	2.6(a)(i)
Action	4.15(a)
Allocation Statement	2.7
Applicable Survival Period	10.1(d)
Asset Purchase Agreement	Preamble
Assigned Contracts	2.1(e)
Assignment and Assumption Agreement	3.2(c)
Assumed Liabilities	2.3
Base Amount	2.6(a)(ii)
Business Authorizations	4.7(a)
Buyer	Preamble
Buyer Closing Certificate	8.3(c)
Buyer Indemnitees	10.2(a)
Buyer Restricted Business	6.8(b)
Buyer Warranty Losses	10.2(b)
Cash Consideration	2.5(a)
CERCLA	4.18(a)(iv)
Closing	3.1
Closing Consideration	2.5(b)
Closing Date	3.1
Closing Equipment Part Inventory Amount	2.6(a)(iii)
Closing Equipment Part Inventory Statement	2.6(a)(iv)
COBRA	7.3(i)
Confidentiality Agreement	6.3
Consents	4.3(a)
Environment	4.18(a)(i)
Environmental Action	4.18(a)(ii)
Environmental Clean-up Site	4.18(a)(iii)
Environmental Laws	4.18(a)(iv)
Environmental Permit	4.18(a)(v)
Escrow Agent	3.3(a)
Escrow Agreement	3.2(a)
Escrow Fund	3.3(a)
Excluded Assets	2.2
Excluded Contracts	2.2(e)
Excluded Liabilities	2.4
Facility	Preamble
Hazardous Substances	4.18(a)(vi)
In-Bound Licenses	4.11(a)



Insured Real Properties	8.2(g)
Intellectual Property License Agreement	3.2(d)
Losses	10.2(a)
Material Contract	4.13(b)
Noncompetition Period	6.8(a)
Notice of Claim	10.5(a)
Option Agreement	2.5(b)
Parent	Preamble
Personal Property	4.8(a)
Policies	4.19(a)
Post-Closing Tax Period	7.4(b)
Pre-Closing Tax Period	7.4(b)
Proposal	6.9(a)
Purchase Price	2.5(a)
Purchased Assets	2.1
Real Property	4.10(a)
Release	4.18(a)(vii)
Representatives	6.3
Restricted Contract	2.8(a)
Seller	Preamble
Seller Benefit Plans	4.16(a)
Seller Closing Certificate	8.2(c)
Seller Disclosure Schedule	Preamble Article IV
Seller Employees	7.3(f)
Seller Fundamental Covenants	10.2(c)
Seller Indemnitees	10.3(a)
Seller Restricted Business	6.8(a)
Seller Warranty Losses	10.3(b)
Special Warranty Deed	3.2(e)
Supply Agreement	3.2(f)
Third Party Claim	10.5(a)
Third Party Defense	10.5(b)
Transferred Employees	7.3(b)
Transferred Vacation Benefits	7.3(c)
Transition Services Agreement	3.2(g)
Vanderzanden Farms Termination	6.1

ARTICLE II

PURCHASE AND SALE

2.1 Purchase and Sale of the Purchased Assets . Upon the terms and subject to the conditions of this Asset Purchase Agreement, at the Closing, Seller shall sell, assign, transfer, convey and deliver to Buyer or a Subsidiary of Buyer designated by Buyer in writing to Seller not less than ten (10) Business Days prior to the Closing, and Buyer or such Subsidiary shall purchase, acquire and accept from Seller, free and clear of Liens except for Permitted Liens, the entire right, title and interest of Seller in, to and under all of (i) the tangible assets and properties located at the Facility, including the tangible assets and properties set forth below, and (ii) the intangible assets, properties and rights specifically listed below, in each case other than the Excluded Assets (the “ Purchased Assets ”):

(a) the Facility;

(b) all Equipment Part Inventory, including those listed on Schedule 2.1(b);

(d) all Equipment, including those listed on Schedule 2.1(d);

(e) all Contracts listed on Schedule 2.1(e) (the “ Assigned Contracts ”);

(f) all Business Authorizations listed on Schedule 2.1(f);

(g) all Books and Records;

(h) all claims, causes of action, choses in action, rights of recovery and rights under all warranties, representations and guarantees made by suppliers of products, materials or equipment, or components thereof, to the extent exclusively arising from or relating to the other Purchased Assets or the Assumed Liabilities;

(i) all insurance benefits, including rights and proceeds, to the extent exclusively arising from or relating to the other Purchased Assets or the Assumed Liabilities;

(j) all prepaid expenses to the extent exclusively related to the Purchased Assets;

(k) all security deposits, earnest deposits and all other forms of deposit or security placed with Seller for the performance of an Assigned Contract; and

(l) the assets, properties and rights specifically set forth on Schedule 2.1(l).

2.2 Excluded Assets . The Purchased Assets do not include, and Seller is not selling, assigning, transferring, conveying or delivering, and neither Buyer nor any Subsidiary of Buyer is purchasing, acquiring or accepting from Seller any other assets, properties or rights set forth in this Section 2.2 (collectively, the “ Excluded Assets ”):

(a) subject to Section 2.1(k) of this Asset Purchase Agreement, all cash, cash

equivalents and bank accounts of Seller;

(b) all Accounts Receivable;

(d) all Intellectual Property Rights and Technology of Seller;

(e) all Contracts that are not Assigned Contracts (the “ Excluded Contracts ”);

(f) the corporate seals, Charter Documents, minute books, stock books, Tax Returns, books of account or other records having to do with the corporate organization or Taxes of Seller;

(g) all Policies and, subject to Section 2.1(i) hereof, all rights and benefits thereunder;

(h) the shares of Capital Stock of any Subsidiaries of Seller;

(i) any Tax refunds or credits or any other Tax assets of Seller and its Affiliates;

(j) the rights which accrue or will accrue to Seller under this Asset Purchase Agreement and the Ancillary Agreements; and

(k) the assets, properties and rights specifically set forth on Schedule 2.2(k).

2.3 Assumed Liabilities . Upon the terms and subject to the conditions of this Asset Purchase Agreement, Buyer or a Subsidiary of Buyer designated by Buyer in writing to Seller not less than ten (10) Business Days prior to the Closing shall assume effective as of the Closing, and from and after the Closing Buyer or such Subsidiary shall pay, discharge or perform when due, as appropriate, only the following Liabilities of Seller (the “ Assumed Liabilities ”), and no other Liabilities:

(a) all Liabilities in respect of the Assigned Contracts but only to the extent that such Liabilities thereunder are required to be performed after the Closing Date and do not relate to any failure to perform, improper performance, warranty or other breach, default or violation by Seller on or prior to the Closing; and

(b) accrued vacation in respect of each Transferred Employees (up to a maximum of 80 hours per Transferred Employee), as listed in Section 4.17(d) of the Seller Disclosure Schedule.

2.4 Excluded Liabilities . Neither Buyer nor any of its Affiliates shall assume any Liabilities of Seller (such unassumed Liabilities, the “ Excluded Liabilities ”) other than those specifically set forth in Section 2.3. Without limiting the generality of the foregoing, in no event shall Buyer or any of its Affiliates assume or incur any Liability in respect of, and Seller shall

remain bound by and liable for, and shall pay, discharge or perform when due, the following Liabilities of Seller:

(a) all Liabilities for Taxes of Seller or any Affiliate of Seller, including Taxes of Seller or any Affiliate of Seller relating to the Purchased Assets for any Pre-Closing Tax Period, other than as provided in Section 7.4;

(b) all Liabilities in respect of the Excluded Contracts and other Excluded Assets;

(c) all product Liability, warranty and similar claims for damages or injury to person or property, claims of infringement of Intellectual Property Rights and all other Liabilities, regardless of when made or asserted, which arise out of or are based upon any events occurring or actions taken or omitted to be taken by Seller, or otherwise arising out of or incurred in connection with the use or operation of the Purchased Assets, on or before the Closing Date;

(d) all Pre-Closing Environmental Liabilities;

(e) all Indebtedness related to the Purchased Assets;

(f) all Liabilities under Seller Benefit Plans except as provided in Section 2.3(b); and

(g) all Liabilities arising out of or incurred in connection with the negotiation, preparation and execution of this Asset Purchase Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby, including Taxes and fees and expenses of counsel, accountants and other experts.

2.5 Purchase Price .

(a) The consideration to be paid by Buyer to Seller for the Purchased Assets (the “ Purchase Price ”) shall be (i) twenty-six million Dollars ($26,000,000) (the “ Cash Consideration ”), subject to adjustment as set forth in Section 2.6, and (ii) the assumption of the Assumed Liabilities.

(b) In the event that Buyer exercised its option to acquire the Purchased Assets on or prior to 11:59 p.m. Pacific time on November 15, 2011, pursuant to the Option Agreement (the “ Option Agreement ”) dated as of October 1, 2010, by and between Buyer and Seller, the Option Premium paid to Seller shall be credited against the Purchase Price. The amount of the Cash Consideration payable at the Closing (the “ Closing Consideration ”) shall be equal to the Cash Consideration less than the Option Premium.

2.6 Purchase Price Adjustment .

(a) For purposes of this Section 2.6, the following terms shall have the meanings assigned to them in this Section 2.6(a):

(i) “ Accounting Principles ” means GAAP applied on a basis

consistent with its application in the preparation of the financial information of the Seller.

(ii) “ Base Amount ” means the average month-end stock value of the Equipment Part Inventory for the first nine months of 2010, calculated by aggregating the simple moving average of the purchase price of individual line items of Equipment Part Inventory.

(iii) “ Closing Equipment Part Inventory Amount ” means the aggregate dollar amount of Equipment Part Inventory, net of applicable reserves, as of the date two (2) Business Days prior to the Closing Date, calculated in accordance with the Accounting Principles.

(iv) “ Closing Equipment Part Inventory Statement ” means an unaudited statement of Closing Equipment Part Inventory Amount that is prepared in accordance with the Accounting Principles.

(b) Within five (5) Business Days, but not less than two (2) Business Days prior to the Closing Date, Buyer shall have conducted, or at Buyer’s option shall have caused a third party to conduct, a physical inventory for purposes of preparing the Closing Equipment Part Inventory Statement. Seller shall provide reasonable access during normal business hours to Buyer to Seller’s facilities for the purpose of preparing the Closing Equipment Part Inventory Statement. Seller and its Representatives shall have the right to observe the taking of such physical inventory and Buyer and the Seller shall cooperate in good faith with respect to any such physical inventory. Subject to the consent of the Seller with respect to the amount of the Closing Equipment Part Inventory Amount, such consent not to be unreasonably withheld or delayed, no later than two (2) Business Days prior to the Closing Date, Buyer will prepare, or cause to be prepared, and deliver to Seller the Closing Equipment Part Inventory Statement which shall set forth the calculation of the Closing Equipment Part Inventory Amount as mutually agreed by Buyer and the Seller.

(d) The Purchase Price shall be adjusted as follows: (i) if the Closing Equipment Part Inventory Amount is less than the Base Amount, the Cash Consideration shall be reduced by the absolute value of the difference between the Base Amount and the Closing Equipment Part Inventory Amount; or (ii) if the Closing Equipment Part Inventory Amount is greater than the Base Amount, the Cash Consideration shall be increased by absolute value of the difference between the Base Amount and the Closing Equipment Part Inventory Amount.

2.7 Allocation . Within 30 days following the Closing, Buyer shall deliver to Seller an allocation statement setting forth the allocation of the Purchase Price (which, for the avoidance of doubt, shall include the Option Premium credited against the Purchase Price for purposes of this Section 2.7) for Tax purposes, which allocation shall be agreed upon by the Parties (as agreed and as may be revised pursuant to the last sentence of this Section 2.7, the “ Allocation Statement ”). Except as otherwise required by Law, Buyer and Seller shall file all Tax Returns (such as IRS Form 8594 or any other forms or reports required to be filed pursuant to Section 1060 of the Code, if applicable, or any comparable provisions of Law) in a manner that is consistent with the Allocation Statement and refrain from taking any action inconsistent

therewith. Buyer and Seller agree to treat any payments made pursuant to the indemnification provisions of this Asset Purchase Agreement as an adjustment to the Purchase Price for Tax purposes.

2.8 Consents .

(a) Notwithstanding anything in this Asset Purchase Agreement to the contrary, this Asset Purchase Agreement shall not constitute an agreement to sell, assign, transfer, convey or deliver any Purchased Asset or any benefit arising under or resulting from such Purchased Asset if the sale, assignment, transfer, conveyance or delivery thereof, without the Consent of a third party, (i) would constitute a breach or other contravention of the rights of such third party, (ii) would be ineffective with respect to any party to a Contract concerning such Purchased Asset, or (iii) would, upon transfer, in any way adversely affect the rights of Buyer under such Purchased Asset. If the sale, assignment, transfer, conveyance or delivery by Seller to, or any assumption by Buyer of, any interest in, or Liability under, any Purchased Asset requires the Consent of a third party, then such sale, assignment, transfer, conveyance, delivery or assumption shall be subject to such Consent being obtained. Without limiting Section 2.8(b), to the extent any Assigned Contract may not be assigned to Buyer by reason of the absence of any such Consent (“ Restricted Contract ”), Buyer shall not be required to assume any Assumed Liabilities arising under such Restricted Contract.

(b) To the extent that any Consent in respect of a Restricted Contract or any other Purchased Asset shall not have been obtained on or before the Closing Date, Buyer may elect to proceed with the Closing, in which case, Seller shall for a period of up to ninety (90) days following the Closing Date continue to use reasonable best efforts to obtain any such Consent after the Closing Date. Seller shall for a period of up to ninety (90) days following the Closing Date cooperate with Buyer in any economically feasible arrangement proposed by Buyer to provide that Buyer shall receive the interest of Seller in the benefits under such Restricted Contract or other Purchased Asset. As soon as a Consent for the sale, assignment, transfer, conveyance, delivery or assumption of a Restricted Contract or other Purchased Asset is obtained, Seller shall promptly assign, transfer, convey and deliver such Restricted Contract or Purchased Asset to Buyer, and Buyer shall assume the Assumed Liabilities under any such Restricted Contract from and after the date of assignment to Buyer pursuant to a special-purpose assignment and assumption agreement substantially similar in terms to those of the Assignment and Assumption Agreement.

(c) Nothing contained in this Section 2.8 or elsewhere in this Asset Purchase Agreement shall be deemed a waiver by Buyer of its right to have received on the Closing Date an effective assignment of all of the Purchased Assets or of the covenant of Seller to obtain all Consents, nor shall this Section 2.8 or any other provision of this Asset Purchase Agreement be deemed to constitute an agreement to exclude from the Purchased Assets any Assigned Contracts or other Purchased Asset as to which a Consent may be necessary.

ARTICLE III

CLOSING

3.1 Closing Date . The closing of the Transactions contemplated by this Asset Purchase Agreement (the “ Closing ”) shall take place at the offices of Morgan, Lewis & Bockius LLP, 2 Palo Alto Square, Suite 700, 3000 El Camino Real, Palo Alto, California 94306, at 10:00 a.m. on a date to be specified by the parties which shall be no later than two (2) Business Days after satisfaction (or waiver as provided herein) of the conditions set forth in Article VIII (other than those conditions that by their nature will be satisfied at the Closing), unless another time, date and/or place is agreed to in writing by the parties. The date on which the Closing occurs is referred to in this Asset Purchase Agreement as the “ Closing Date .”

3.2 Deliveries by Seller at the Closing . At the Closing, Seller shall deliver to Buyer the following:

(a) an Escrow Agreement in a form reasonably satisfactory to the parties (the “ Escrow Agreement ”), duly executed by Seller;

(b) a Bill of Sale in a form reasonably satisfactory to the parties, duly executed by Seller;

(c) an Assignment and Assumption Agreement in a form reasonably satisfactory to the parties (the “ Assignment and Assumption Agreement ”), duly executed by Seller;

(d) an Intellectual Property License Agreement in the form of Exhibit A (the “ Intellectual Property License Agreement ”) hereto duly executed by Seller;

(e) with respect to each parcel of Real Property, a special warranty deed (the “ Special Warranty Deed ”) in a form reasonably satisfactory to the parties, duly executed by Seller;

(f) a Supply Agreement in the form of Exhibit B (the “ Supply Agreement ”) hereto duly executed by Seller;

(g) a Transition Services Agreement in a form reasonably satisfactory to the parties (the “ Transition Services Agreement ”) hereto duly executed by Seller;

(h) such other good and sufficient instruments of transfer as Buyer reasonably deems necessary and appropriate to vest in Buyer all right, title and interest in, to and under the Purchased Assets;

(i) the Seller Closing Certificate; and

(j) a completed certification of non-foreign status pursuant to Section 1.1445-2(b)(2) of the Treasury regulations duly executed by Seller.

3.3 Deliveries by Buyer at the Closing . At the Closing, Buyer shall deliver to Seller the following:

(a) Buyer shall pay the Closing Consideration as follows (i) an amount equal to $2,600,000 (the “ Escrow Fund ”) to [ ] as escrow agent (the “ Escrow Agent ”) pursuant to

the Escrow Agreement to secure indemnification obligations of Seller set forth in this Asset Purchase Agreement, and (ii) an amount equal to the Closing Consideration less than the Escrow Fund by wire transfer to an account of Seller designated in writing by Seller to Buyer no later than three (3) Business Days prior to the Closing Date;

(b) the Escrow Agreement duly executed by Buyer or its designee;

(d) the Intellectual Property License Agreement duly executed by Buyer or its designee;

(e) the Transition Services Agreement duly executed by Buyer or its designee;

(f) the Supply Agreement duly executed by Buyer or its designee; and

(g) the Buyer Closing Certificate.

3.4 Guarantee . Subject to the terms hereof, Parent hereby unconditionally and irrevocably guarantees to Seller and its Affiliates, as primary obligor and not merely as a surety, (a) the due and punctual performance and observance by Buyer of each term, provision and condition binding upon Buyer pursuant to this Asset Purchase Agreement and each Ancillary Agreement and (b) the due, punctual and full payment (when and as the same may become due and payable) of each amount that Buyer is or may become obligated to pay under or pursuant to this Asset Purchase Agreement and each Ancillary Agreement, in accordance with the terms thereof, by acceleration or otherwise without offset or deduction.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Buyer as of the date hereof that the statements contained in this Article IV are true and correct, except as set forth in the disclosure schedule dated and delivered as of the date hereof by Seller to Buyer (the “ Seller Disclosure Schedule ”), which is attached to this Asset Purchase Agreement and is designated therein as being the Seller Disclosure Schedule. The Seller Disclosure Schedule shall be arranged in paragraphs corresponding to each representation and warranty set forth in this Article IV. Each exception to a representation and warranty set forth in the Seller Disclosure Schedule shall qualify the specific representation and warranty which is referenced in the applicable paragraph of the Seller Disclosure Schedule, and other applicable representations and warranties contained herein to the extent the relevance of such exception or qualification as an exception or qualification to (or a disclosure for purposes of) such other representations or warranties is readily apparent on its face from a reading of the Seller Disclosure Schedule. Nothing in the Seller Disclosure Schedule is intended to broaden the scope of any representation or warranty of Seller contained in this Asset Purchase Agreement.

4.1 Organization and Good Standing . Seller is a corporation duly incorporated, validly existing and in good standing under the Laws of the State of Delaware, has all requisite corporate power to own, lease and operate the Purchased Assets and is duly qualified to do business and is in good standing in the State of Oregon .

4.2 Authority and Enforceability .

(a) Seller has the requisite corporate power and authority to enter into this Asset Purchase Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Asset Purchase Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Seller. Seller has duly executed and delivered this Asset Purchase Agreement. This Asset Purchase Agreement constitutes the valid and binding obligation of Seller, enforceable against it in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting or relating to creditors’ rights generally, and (ii) the availability of injunctive relief and other equitable remedies.

(b) Seller has the requisite corporate power and authority to enter into each Ancillary Agreement and to consummate the transactions contemplated thereby. The execution and delivery by Seller of each Ancillary Agreement and the consummation of the transactions contemplated thereby have been duly authorized by all necessary corporate action on the part of Seller. On or prior to the Closing, Seller will have duly executed and delivered each Ancillary Agreement. Upon execution and delivery of the Ancillary Agreements by Seller, the Ancillary Agreements will constitute the valid and binding obligation of Seller, enforceable against it in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting or relating to creditors’ rights generally, and (ii) the availability of injunctive relief and other equitable remedies. The Ancillary Agreements will effectively vest in Buyer good, valid and marketable title to all the Purchased Assets free and clear of all Liens, other than Permitted Liens.

4.3 No Conflicts; Consents .

(a) The execution and delivery of this Asset Purchase Agreement by Seller do not, and the execution and delivery of each Ancillary Agreement by Seller, the performance by Seller of its obligations hereunder and thereunder and the consummation by Seller of the transactions contemplated hereby and thereby (in each case, with or without the giving of notice or lapse of time, or both), will not, directly or indirectly, (i) violate the provisions of any of Seller’s Charter Documents, (ii) violate or constitute a default, an event of default or an event creating rights of acceleration, termination or cancellation, imposition of additional material obligations or loss of material rights under any Assigned Contract by which the Facility or the Purchased Assets are bound, (iii) violate or conflict in any material respect with any Law, Authorization or Order applicable to Seller, or (iv) result in the creation of any Liens (other than Permitted Liens) upon the Facility or any of the Purchased Assets. Section 4.3(a) of the Seller Disclosure Schedule sets forth all consents, waivers and other approvals that are required in connection with the transactions contemplated by this Asset Purchase Agreement for the effective assignment to and assumption by Buyer of any Assigned Contract to which Seller is a party (collectively, “ Consents ”).

(b) No material Authorization or Order of, registration, declaration or filing with, or notice to, any Governmental Entity or other Person, is required by or with respect to Seller in connection with the execution and delivery of this Asset Purchase Agreement and the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby.

4.4 Equipment Part Inventory; Operational Inventory . Schedule 4.4 of the Seller Disclosure Schedule sets forth the Equipment Part Inventory and Operational Inventory and the stock value of the Equipment Part Inventory for the first nine months of 2010 (calculated by aggregating the simple moving average of the purchase price of individual line items of Equipment Part Inventory), subject to repair and replacement in the Ordinary Course of Business. Except for Inventory consigned to Seller by Buyer, each item of the Equipment Part Inventory and Operational Inventory is to Seller’s Knowledge, free of any material defect or other deficiency. All of such Equipment Part Inventory and Operational Inventory is located at the Facility and no such Equipment Part Inventory or Operational Inventory is held on a consignment basis except for that received from or on behalf of Buyer.

4.5 Taxes .

(a) To the extent that the breach of the following would reasonably be expected to result in any liability of Buyer for Taxes: (i) Seller has timely filed all Tax Returns that were required to be filed; (ii) all such Tax Returns were complete and correct in all material respects; (iii) all Taxes owed by Seller (whether or not shown on any Tax Return) have been timely paid; (iv) Seller is not currently the beneficiary of any extension of time within which to file any Tax Return; and (v) Seller has not received any written notice of any action or audit now proposed or threatened or pending against, or with respect to Seller in respect of any Taxes.

(b) There are no Liens for Taxes on any of the Purchased Assets other than Permitted Liens. Seller has withheld and timely paid all Taxes required to have been withheld and paid with respect to the Purchased Assets, and all material Tax reporting requirements associated with such Taxes have been satisfied.

(c) To the extent that a breach of the following would reasonably be expected to result in any liability of Buyer for Taxes, (i) Seller has withheld and paid all material Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, or other third party, and (ii) all material Tax reporting requirements with respect thereto have been satisfied.

(d) In each case with respect to the Purchased Assets, (i) there is no dispute or claim concerning any Liability for Taxes with respect to Seller for which written notice has been provided, or which is asserted or threatened in writing, and (ii) Seller has not waived (or is subject to a waiver of) any statute of limitations in respect of Taxes or has not agreed to (or is subject to) any extension of time with respect to a Tax assessment or deficiency.

(e) Seller is a “United States person” within the meaning of Section 7701(a)(30) of the Code.

(f) Seller is not a party to or bound by any Tax indemnity agreement, Tax

sharing agreement or similar Contract that would become binding upon Buyer upon completion of the transactions contemplated by this Asset Purchase Agreement.

4.6 Compliance with Law .

(a) Since January 1, 2009, Seller has used and operated the Purchased Assets in compliance in all material respects with all applicable Laws.

(b) To Seller’s knowledge, no event has occurred and no circumstances exist that (with or without the passage of time or the giving of notice) would reasonably be expected to result in a material violation of, conflict with or failure on the part of Seller to operate the Purchased Assets in material compliance with, any applicable Law. Since January 1, 2009, Seller has not received written notice regarding any violation of, conflict with, or failure to operate the Purchased Assets in compliance with, any applicable Law.

4.7 Business Authorizations .

(a) Seller has all material Authorizations required under applicable Law with respect to the operation or ownership of the Purchased Assets as currently operated or owned by Seller (the “ Business Authorizations ”). Seller owns or possesses such Business Authorizations free and clear of all Liens other than Permitted Liens. Such Business Authorizations are valid and in full force and effect. All Business Authorizations are listed in the Seller Disclosure Schedule.

(b) To Seller’s Knowledge, no event has occurred and no circumstances exist that (with or without the passage of time or the giving of notice) may result in a material violation of, conflict with, failure on the part of Seller to comply with the terms of, or the revocation, withdrawal, termination, cancellation, suspension or modification of any Business Authorization. Seller has not received written notice regarding any violation of, conflict with, failure to comply with the terms of, or any revocation, withdrawal, termination, cancellation, suspension or modification of, any such Business Authorization. To Seller’s Knowledge, Seller is not in material default, nor has Seller received written notice of any claim of material default, with respect to any Business Authorization.

(c) No Person other than Seller owns or has any proprietary, financial or other interest (direct or indirect) in any Business Authorization

4.8 Title to Personal Properties .

(a) The Seller Disclosure Schedule sets forth a complete and accurate list of all personal properties and assets that are included in the Purchased Assets (“ Personal Property ”) with a current fair market value in excess of $30,000, specifying whether such Personal Property is owned or leased and, in the case of leased assets, indicating the parties to, execution dates of and annual payments under, the lease.

(b) With respect to Personal Property that it purports to own (other than Inventory sold in the Ordinary Course of Business since the date thereof), Seller has good and marketable title to all such Personal Property, free and clear of all Liens except for Permitted Liens.

(c) All leases under which Personal Property is leased are in full force and effect in accordance with its terms, and Seller is not, to Seller’s Knowledge, is in breach of any of the terms of any such lease.

4.9 Condition of Tangible Assets . To Seller’s Knowledge, all Purchased Assets that are tangible property are in good operating condition and repair (subject to normal wear and tear given the use and age of such assets).

4.10 Real Property .

(a) The Seller Disclosure Schedule contains a list of all real property and interests in real property owned in fee by Seller that constitutes part of the Facility (the “ Real Property ”). Seller does not lease any real property that constitutes part of the Facility.

(b) With respect to each parcel of Real Property:

(i) Seller has good and marketable title to each such parcel of Real Property free and clear of all Liens, except (A) Permitted Liens and (B) zoning and building restrictions, easements, covenants, rights‑of‑way and other similar restrictions of record, none of which impairs the current use of such Real Property in any material respect.

(ii) Seller has provided to Buyer copies of the deed by which Seller acquired each parcel of Real Property, and copies of the most recent title insurance policy and survey in the possession of Seller (if any) with respect to such parcels.

(iii) There are no outstanding options or rights of first refusal to purchase such parcel of Real Property, or any portion thereof or interest therein.

(d) No Governmental Entity having the power of eminent domain over the Real Property has commenced or, to Seller’s Knowledge, intends to exercise the power of eminent domain or a similar power with respect to all or any part of the Real Property. There are no pending or, to Seller’s Knowledge, threatened condemnation, building, zoning or other land use regulatory proceedings relating to any portion of the Real Property which would reasonably be expected to adversely effect in any material respect the current use, occupancy or value thereof. Seller has not received notice of any pending or threatened special assessment proceedings affecting any portion of the Real Property.

(e) Seller has not received any written notice of any material violation of any Laws or administrative or judicial orders (including those relating to hazardous materials) affecting or regarding the Real Property.

(f) Seller has legal rights of ingress and egress to and from all Real Property from and to the Facility to a public street.

(g) No Person other than Seller is in possession of any of the Real Property or any portion thereof, and there are no leases, subleases, licenses, concessions or other

agreements, written or oral, granting to any Person other than Seller the right of use or occupancy of the Real Property or any portion thereof.

(h) All water, sewer, gas, electric, telephone and drainage facilities, and all other utilities required by any Law or currently used in the operation of the Facility are installed to the property lines of the Real Property (taken as a whole).

4.11 Intellectual Property .

(a) The Seller Disclosure Schedule lists all licenses, sublicenses and other agreements (“ In-Bound Licenses ”) pursuant to which a third party authorizes Seller to use, practice any rights under, or grant sublicenses with respect to, any Intellectual Property Rights or Technology owned by a third party and used by Seller at the Facility, other than In-Bound Licenses that consist solely of “shrink-wrap” and similar commercially available end-user licenses, and, with respect to each In-Bound License, whether the In-Bound License is exclusive or non-exclusive.

(b) Seller represents and warrants that it possesses the rights necessary to enter into and perform its obligations under the Intellectual Property License Agreement.

(c) To Seller’s knowledge and except for uses that apply solely to Seller-proprietary products, by operating the Facility and using the other Purchased Assets and Licensed Intellectual Property to manufacture Seller-proprietary semiconductor devices, Seller has not infringed and is not infringing upon, or otherwise unlawfully used or uses, any Intellectual Property Rights of a third party. Since January 1, 2009, and except as set forth in Section 4.11(c) of the Seller Disclosure Schedule or with respect to claims solely related to Seller-proprietary products, Seller has not received any communication alleging that Seller has violated or, by operating the Facility and using the other Purchased Assets to manufacture Seller-proprietary semiconductor devices, would violate, any Intellectual Property Rights of a third party.

(d) To Seller’s Knowledge, no Facility Employee has been or is, by performing services related to Seller’s operation of the Facility and use of the other Purchased Assets to manufacture Seller-proprietary semiconductor devices, in violation of any term of any employment, invention disclosure or assignment, confidentiality or noncompetition agreement or other restrictive covenant or any Order.

(e) The execution and delivery of this Asset Purchase Agreement by Seller does not, and the consummation of the transactions contemplated hereby (in each case, with or without the giving of notice or lapse of time, or both), will not, directly or indirectly, result in the loss or impairment of, or give rise to any right of any third party to terminate or reprice or otherwise renegotiate any of the In-Bound Licenses, nor require the consent of any Governmental Entity or other third party in respect of any such In-Bound Licenses.

(f) To Seller’s Knowledge, the Software and other information technology used to operate the Facility and that will be included as a Purchased Asset or that constitutes Licensed Intellectual Property under the Intellectual Property License Agreement (i) are configured and maintained to mitigate the effects of viruses and do not contain Trojan horses or

other malicious code and (ii) have not suffered any material error, breakdown, failure, or security breach in the last twenty-four months that has caused material disruption or damage to the Facility or the use of the other Purchased Assets to manufacture Seller-proprietary semiconductor devices or that was potentially reportable to any Governmental Entity.

(g) Seller is in possession of and the Buyer will receive such working copies of all Software included in the Purchased Assets or that constitutes Licensed Intellectual Property licensed to Seller under the Intellectual Property License Agreement, including, object and (for Software owned by or exclusively licensed to any Acquired Company) source code, and all related manuals and other documentation, as included in the Purchased Assets or Licensed Intellectual Property.

4.12 Absence of Certain Changes or Events . From the date of Seller’s most recent balance sheet filed with the Securities and Exchange Commission on or prior to the date of this Asset Purchase Agreement to the Closing Date:

(a) there has not been any material adverse change in the condition of the Purchased Assets, except as set forth in Section 4.12(a) of the Seller Disclosure Schedule;

(b) Seller has not amended or changed, or proposed to amend or change, its Charter Documents in a manner that would reasonably be expected to delay the consummation of the transactions contemplated by this Asset Purchase Agreement;

(c) Seller has not (i) increased or modified the compensation or benefits payable or to become payable by Seller to any current or former directors, employees, consultants or contractors engaged in the operation of the Facility in any material respect, (ii) increased or modified any Benefit Plan made to, for or with any current or former directors, employees, consultants or contractors engaged in the operation of the Facility, or (iii) entered into any employment, severance or termination agreement regarding any of the Transferred Employees;

(d) Seller has not sold, leased, transferred or assigned any Purchased Assets, except for (i) the sale of Inventory other than Equipment Part Inventory and Operational Inventory, (ii) the sale of obsolete Equipment, in each case in the Ordinary Course of the Business, and (iii) except as set forth in Section 4.12(d) of the Seller Disclosure Schedule;

(e) Seller has not removed or disposed of any Equipment, except as set forth in Section 4.12(e) of the Seller Disclosure Schedule;

(f) Seller has not mortgaged, pledged or subjected to Liens any Purchased Assets, except for Liens arising under lease financing arrangements existing as of the date of Seller’s most recent balance sheet filed with the Securities and Exchange Commission on or prior to the date of this Asset Purchase Agreement, Permitted Liens and Liens set forth in Section 4.12(f) of the Seller Disclosure Schedule;

(g) Seller has not entered into, amended, modified, canceled or waived any rights under, any Material Contract and no Material Contract has been terminated or cancelled, except for in the Ordinary Course of the Business or as set forth in Section 4.12(g) of the Seller

Disclosure Schedule;

(h) there has not been any material labor dispute, other than individual grievances, or to the Knowledge of Seller, any activity or proceeding by a labor union or representative thereof to organize any Facility Employee;

(i) Seller has not agreed, or entered into any arrangement, to take any action which, if taken prior to the date hereof, would have made any representation or warranty set forth in this Article IV as qualified by the Seller Disclosure Schedule materially untrue or incorrect as of the date when made;

(j) there has not been any material damage, destruction or loss with respect to the Purchased Assets, whether or not covered by insurance; and

(k) Seller has not agreed, whether in writing or otherwise, to do any of the foregoing.

4.13 Contracts .

(a) Except as set forth in Section 4.13(a) of the Seller Disclosure Schedule, Seller is not a party to, or bound by any Contract that is, in each case related to the Purchased Assets but not solely related to Seller-proprietary products, and is in effect as of the date of this Asset Purchase Agreement:

(i) a Contract or series of related Contracts for the purchase of materials, supplies, goods, services, equipment or other assets that involves (A) annual payments by Seller of $30,000 or more, or (B) aggregate payments by Seller of $30,000 or more;

(ii) a Contract or series of related Contracts for the sale by Seller of (A) materials, supplies, goods, services, equipment or other assets, that involves a specified annual minimum dollar sales amount of $30,000 or more, or (B) pursuant to which Seller received payments of more than $30,000 in the year ended December 31 of the last full fiscal year prior to the date of this Agreement;

(iii) a Contract that requires Seller to purchase its total requirements of any product or service from a third party or that contains “take or pay” provisions;

(iv) a Contract or series of related Contracts that (A) continues over a period of more than one (1) year from the date hereof or (B) involves payments to or by Seller exceeding $30,000, other than arrangements disclosed pursuant to the preceding paragraphs (i) and (ii);

(v) a partnership, joint venture or similar Contract;

(vi) a distribution, dealer, representative or sales agency Contract;

(vii) a Contract for the lease of personal property which provides for payments to or by Seller in any one case of $30,000 or more annually or $30,000 or more over the term of the Contract;

(viii) a Contract which provides for the indemnification by Seller of any Person, the undertaking by Seller to be responsible for consequential damages, or the assumption by any member of Seller of any material Tax, environmental or other Liability;

(ix) a Contract which restrains the ability of Seller to engage or compete in any manner or in any business in a manner that would reasonably be expected to have a material adverse effect on the Purchased Assets as currently used by Seller;

(x) an In-Bound License;

(xi) a Contract relating to the acquisition by another Person or disposition to another Person of a material portion of the Purchased Assets (whether by merger, sale of stock, sale of assets or otherwise);

(xii) a collective bargaining Contract or other Contract with any labor organization, union or association with respect to the Facility Employees; and

(xiii) an employment or consulting Contract with a Facility Employee other than those that are terminable at-will by Seller on less than 30 days’ notice.

(b) Each Contract required to be listed in Section 4.13(a) of the Seller Disclosure Schedule (collectively, the “ Material Contracts ”) is valid and enforceable in accordance with its terms. Seller has complied with and is in compliance with, and to Seller’s Knowledge, all other parties thereto have complied with and are in compliance with, the provisions of each Material Contract.

(c) Seller is not, and to Seller’s Knowledge, no other party thereto is, in default in the performance, observance or fulfillment of any obligation, covenant, condition or other term contained in any Material Contract, and Seller has not given or received written notice to or from any Person relating to any such alleged or potential default that has not been cured. To Seller’s Knowledge, no event has occurred which with or without the giving of notice or lapse of time, or both, may materially conflict with or result in a material violation or breach of, or give any Person the right to accelerate the maturity or performance of, or cancel, terminate or modify, any Material Contract.

(d) Seller has made available accurate and complete copies of each Material Contract to Buyer.

4.14 Sufficiency of Purchased Assets . Except for any Facility Employees who do not become Transferred Employees, Intellectual Property Rights or Technology owned by a third party and used by Seller for its own semiconductor manufacturing operations at the Facility and the rights provided pursuant to the Intellectual Property License Agreement, and except as set forth in Section 4.14 of the Seller Disclosure Schedule, the Purchased Assets constitute all tangible assets, Technology and Intellectual Property Rights necessary for the operation of the Facility and the use of the Purchased Assets as conducted by Seller for its own semiconductor manufacturing operations at the Facility as of the date of this Asset Purchase Agreement.

4.15 Litigation .

(a) There is no action, suit or proceeding, claim, arbitration, litigation or

investigation (each, an “ Action ”), in each case related exclusively to the Purchased Assets, (i) pending or, to Seller’s Knowledge, threatened against or affecting Seller, or (ii) that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Asset Purchase Agreement or the Ancillary Agreements. To Seller’s Knowledge, no event has occurred or circumstances exist that serve as a reasonable basis for any such Action. There is no Action against any current or, to Seller’s Knowledge, former Facility Employee with respect to which Seller has or is reasonably likely to have an indemnification obligation.

(b) There is no unsatisfied judgment, penalty or award, in each case related to the Purchased Assets, against or affecting Seller or any of the Purchased Assets, except as solely related to Seller-proprietary products.

4.16 Employee Benefits .

(a) The Seller Disclosure Schedule sets forth a complete and accurate list of all Benefit Plans maintained or contributed to by Seller for the benefit of any Facility Employee (collectively, “ Seller Benefit Plans ”). A current, accurate and complete copy of each Seller Benefit Plan has been provided to Buyer. Seller has no intent or commitment to create any additional Seller Benefit Plan or amend any Seller Benefit Plan.

(b) Except as would not reasonably be expected to result in a material Liability to Buyer following the Closing, each Seller Benefit Plan that is an employee pension benefit plan (as defined in Section 3(2) of ERISA) and which is intended to be qualified under Section 401(a) of the Code, has been determined by the Internal Revenue Service to be so qualified and to the Knowledge of Seller no condition exists that would adversely affect any such determination. No Seller Benefit Plan is a “defined benefit plan” as defined in Section 3(35) of ERISA.

(c) None of Seller or any ERISA Affiliate has been or is currently party to any “multi‑employer plan,” as that term is defined in Section 3(37) of ERISA.

(d) There are no actions, suits or claims (other than routine claims for benefits in the ordinary course) pending or, to Seller’s Knowledge, threatened by any Facility Employee against any Seller Benefit Plan, or, with respect to any Seller Benefit Plan against Seller, any ERISA Affiliate or, to the Knowledge of Seller, any trustee or agent of Seller.

(e) With respect to each Seller Benefit Plan to which Seller or any ERISA Affiliate is a party which constitutes a group health plan subject to Section 4980B of the Code, except as would not reasonably be expected to result in a material Liability to Buyer following the Closing, each such Seller Benefit Plan complies, and in each case has complied, with all applicable requirements of Section 4980B of the Code.

(f) Except as would not result in a material Liability to Buyer following the Closing, there are not any outstanding Liabilities to Transferred Employees under any Seller Benefit Plan that will become the obligation of Buyer after the Closing.

(g) Except as would not result in a material Liability to Buyer following the Closing, the consummation of the transactions contemplated by this Asset Purchase Agreement

will not create any obligation of Buyer under any Seller Benefit Plan that (i) entitles any Facility Employee to severance pay, unemployment compensation or any other payment or (ii) accelerates the time of payment or vesting, or increase the amount of, compensation due to any such Facility Employee, or results in the payment of any other benefits to any Facility Employee or the forgiveness of any Indebtedness of any Facility Employee.

4.17 Labor and Employment Matters .

(a) The Seller Disclosure Schedule sets forth (i) a list of all Facility Employees (including title, position, employment starting date, whether active or on a leave of absence), contractors and consultants primarily engaged in activities at the Facility as of the date hereof, and (ii) the base compensation (listing annual salary) and bonus opportunity (if applicable) of each such Facility Employee, contractor and consultant.

(b) Seller is not a party or subject to any labor union or collective bargaining agreement with respect to the Facility Employees. There have not been since January 1, 2009, and there are not pending or, to Seller’s Knowledge, threatened, any labor disputes, labor strikes, work stoppages, requests for representation, pickets, work slow-downs due to labor disagreements or any actions or arbitrations that involve Facility Employees. There is no unfair labor practice, charge or complaint pending, unresolved or, to Seller’s Knowledge, threatened before the National Labor Relations Board that involve Facility Employees. To Seller’s Knowledge, no event has occurred or circumstance exist that may provide the basis of any work stoppage or other labor dispute with respect to the Facility Employees.

(c) Except as would not result in a material Liability to Buyer following the Closing, Seller has complied with each, and is not in violation of any, Law relating to anti-discrimination and equal employment opportunities in connection with the operation of the Facility. Except as would not result in a material Liability to Buyer following the Closing, there are no pending or, to Seller’s Knowledge, threatened discrimination or retaliation complaint or charge relating to any characteristic protected by any Law against Seller before any Governmental Entity nor, to Seller’s Knowledge, does any basis therefor exist. Except as would not result in a material Liability to Buyer following the Closing, there are, and have been, no violations of any other Law respecting the hiring, hours, wages, occupational safety and health, employment, promotion, termination or benefits of any Facility Employee.

(d) Seller has paid or properly accrued in the Ordinary Course of the Business all wages and compensation due to Facility Employees, including all vacations or vacation pay, holidays or holiday pay, sick days or sick pay, and bonuses. The Seller Disclosure Schedule sets forth accrued vacation hours and aggregate dollar value of all such accrued vacation with respect to each Facility Employee.

(e) Since January 1, 2009, Seller has not effectuated a “plant closing” (as defined in the WARN Act) or a “mass lay-off” (as defined in the WARN Act), in either case affecting the Facility, except in accordance with the WARN Act.

(f) Except as would not result in a material Liability to Buyer following the Closing, Seller has complied and is in compliance with the requirements of the Immigration Reform and Control Act of 1986. The Seller Disclosure Schedule sets forth a true and complete

list of all Facility Employees working in the United States who are not U.S. citizens and a description of the legal status under which each such Facility Employee is permitted to work in the United States. All Facility Employees who are performing services for Seller in the United States are legally able to work in the United States.

4.18 Environmental .

(a) As used in this Asset Purchase Agreement, the following words and terms have the following definitions:

(i) The term “ Environment ” means all indoor or outdoor air, surface water, groundwater, surface or subsurface land, including all fish, wildlife, biota and all other natural resources.

(ii) The term “ Environmental Action ” means any claim, proceeding or other Action brought or threatened under any Environmental Law or the assertion of any claim with respect to Pre-Closing Environmental Liabilities.

(iii) The term “ Environmental Clean‑up Site ” means any location which is listed on the National Priorities List, the Comprehensive Environmental Response, Compensation and Liability Information System, or on any similar state list of sites requiring investigation or cleanup, or which is the subject of any pending Action related to or arising from any alleged violation of any Environmental Law, or at which there has been a threatened or actual Release of a Hazardous Substance.

(iv) The term “ Environmental Laws ” means any and all applicable Laws and Authorizations issued, promulgated or entered into by any Governmental Entity prior to Closing relating to the Environment, worker health and safety, preservation or reclamation of natural resources, or to the management, handling, use, generation, treatment, storage, transportation, disposal, manufacture, distribution, formulation, packaging, labeling, Release or threatened Release of or exposure to Hazardous Substances, including but not limited to: the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq. (“ CERCLA ”); the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq.; the Emergency Planning and Community Right‑to‑Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300(f) et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act 7 U.S.C. Section 136 et seq.; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.; and any similar or implementing state or local Law, and all amendments or regulations promulgated thereunder; and any common law doctrine, including but not limited to, negligence, nuisance, trespass, personal injury, or property damage related to or arising out of the presence, Release, or exposure to Hazardous Substances.

(v) The term “ Environmental Permit ” means any Authorization under Environmental Law and includes any and all Orders issued or entered into by a

Governmental Entity under Environmental Law.

(vi) The term “ Hazardous Substances ” means all explosive or radioactive materials or substances, hazardous or toxic materials, hazardous or toxic wastes, hazardous or toxic chemicals, petroleum and petroleum products (including crude oil or any fraction thereof), asbestos or asbestos containing materials, and all other materials, wastes, chemicals or substances which are regulated by, form the basis of liability or are defined as hazardous, extremely hazardous, toxic or words of similar import, under any Environmental Law, including materials listed in 49 C.F.R. Section 172.101 and materials defined as hazardous pursuant to Section 101(14) of CERCLA.

(vii) The term “ Release ” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing of Hazardous Substances into the Environment.

(b) Seller has obtained, and is in compliance with, all material Environmental Permits required in connection with the Real Property and all the other Purchased Assets. All such Environmental Permits are valid and in full force and effect and all renewal applications for such Environmental Permits have been timely filed with the appropriate Governmental Entity. To Seller’s Knowledge, none of such Environmental Permits will be terminated or impaired or become terminable as a result of the consummation of the transactions contemplated by this Asset Purchase Agreement.

(c) Seller has been, and is currently, in material compliance with all applicable Environmental Laws, and Seller has not received written notice alleging that Seller is not in such compliance with Environmental Laws, in each case in connection with the Real Property or any of the other Purchased Assets. To Seller’s Knowledge, neither the execution of this Asset Purchase Agreement or the Ancillary Agreements will require any notification to or the consent of any Governmental Entity or the undertaking of any investigations or remedial actions pursuant to Environmental Law.

(d) There are no past, pending or, to Seller’s Knowledge, threatened Environmental Actions against or affecting Seller in connection with the Real Property or any of the other Purchased Assets, and Seller is not aware of any facts or circumstances which could reasonably be expected to form the basis for any such Environmental Action with respect to the Real Property or the Purchased Assets.

(e) Seller has not entered into or agreed to any Order, and Seller is not subject to any Order, relating to compliance with any Environmental Law or to investigation or cleanup of a Hazardous Substance under any Environmental Law, in each case in connection with the Real Property or any of the other Purchased Assets.

(f) No Lien other than a Permitted Lien has been attached to, or asserted against the Real Property or any of the other Purchased Assets pursuant to any Environmental Law, and, to Seller’s Knowledge, no such Lien has been threatened. To Seller’s Knowledge, there are not facts, circumstances or other conditions that could reasonably be expected to give

rise to any Liens on or affecting the Real Property or any of the other Purchased Assets under Environmental Law.

(g) Except in material compliance with all applicable Environmental Laws, there has been no treatment, storage, disposal or Release of, and no Person has been exposed to, any Hazardous Substance at, from, into, on or under the Real Property in a manner that could result in a Liability to Seller under Environmental Laws.

(h) To Seller’s Knowledge, there are no aboveground or underground storage tanks on or about the Real Property except in compliance with Environmental Laws.

(i) To the Knowledge of Seller, there is no asbestos containing material or lead based paint containing materials in at, on, under or within the Real Property.

(j) Neither Seller nor, to Seller’s Knowledge, any of its predecessors has in connection with the Real Property or any of the other Purchased Assets, transported or arranged for the treatment, storage, handling, disposal, or transportation of any Hazardous Material to any off‑site location which is an Environmental Clean‑up Site or which could result in an Environmental Action against Seller.

(k) Seller has provided to Buyer true and complete copies of, or access to, all written environmental assessments, studies, Phase I reports and related data, analyses and compliance audits that have been prepared with respect to the Real Property and the other Purchased Assets to the extent that such materials are in Seller’s possession or under their immediate control.

4.19 Insurance .

(a) The Seller Disclosure Schedule sets forth (i) an accurate and complete list of each insurance policy and fidelity bond which covers the Purchased Assets and the Facility Employees (the “ Policies ”) and (ii) with respect to the Purchased Assets, a list of all pending claims and the claims history for Seller during the current year and the preceding three years (including with respect to insurance obtained but not currently maintained). There are no pending claims under any of such Policies with respect to the Purchased Assets as to which coverage has been questioned, denied or disputed by the insurer or in respect of which the insurer has reserved its rights.

(b) The Seller Disclosure Schedule describes any self-insurance arrangement by or affecting Seller with respect to the Purchased Assets, including any reserves thereunder, and describes the loss experience for all claims that were self-insured in the current year and the preceding three years.

(c) All Policies are issued by an insurer that is financially sound and reputable, are in full force and effect and are enforceable in accordance with their terms. Such Policies provide adequate insurance coverage for the Purchased Assets as currently operated and owned, and are sufficient for compliance with all Laws and Contracts to which Seller is a party or by which it is bound in connection with the Purchased Assets.

(d) All premiums due under the Policies have been paid in full or, with

respect to premiums not yet due, accrued. Seller has not received a written notice of cancellation of any Policy or of any material changes that are required in the operation of the Facility or use of the other Purchased Assets as a condition to the continuation of coverage under, or renewal of, any such Policy. There is no existing default or event which, with the giving of notice or lapse of time or both, would constitute a default under any Policy or entitle any insurer to terminate or cancel any Policy with respect to the Purchased Assets. Seller has no Knowledge of any threatened termination of any Policy.

4.20 Suppliers .

(a) Section 4.20 of the Seller Disclosure Schedule sets forth with respect to the Purchased Assets:

(i) each supplier from whom purchases by Seller exceeded $30,000 in the year ended December 31, [2008] or December 31, [2009] pursuant to a Contract; and

(ii) each supplier who constitutes a sole source of supply to Seller in connection with Seller’s manufacture of Seller-proprietary semiconductor products at the Facility as currently operated by Seller; and

(b) No such supplier has canceled or otherwise terminated, or threatened to cancel or otherwise terminate, its relationship with Seller in connection with Seller’s manufacture of Seller-proprietary semiconductor products at the Facility. Seller has not received notice that any such supplier may cancel, terminate or otherwise materially and adversely modify its relationship with Seller in connection with Seller’s manufacture of Seller-proprietary semiconductor products at the Facility or limit its services, supplies or materials to Seller in connection with Seller’s manufacture of Seller-proprietary semiconductor products at the Facility, either as a result of the consummation of the transactions contemplated by this Asset Purchase Agreement or otherwise.

4.21 Brokers or Finders . Seller represents, as to itself and its Affiliates, that no agent, broker, investment banker or other firm or Person is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee in connection with any of the transactions contemplated by this Asset Purchase Agreement and the Ancillary Agreements, except ATREG, whose fees and expenses will be paid by Seller.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller that each statement contained in this Article V is true and correct as of the date hereof.

5.1 Organization and Good Standing . Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation and has the requisite corporate power to own, lease and operate its properties and to carry on its business as now being conducted.

5.2 Authority and Enforceability . Buyer has the requisite corporate power and authority to enter into this Asset Purchase Agreement and the Ancillary Agreements to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Asset Purchase Agreement and the Ancillary Agreements to which Buyer is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Buyer. This Asset Purchase Agreement has been, and the Ancillary Agreements to which Buyer is a party will be, duly executed and delivered by Buyer and, assuming due authorization, execution and delivery by Seller, constitutes the valid and binding obligations of Buyer, enforceable against it in accordance with their respective terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting or relating to creditors’ rights generally, and (b) the availability of injunctive relief and other equitable remedies.

5.3 No Conflicts; Consents .

(a) The execution and delivery of this Asset Purchase Agreement by Buyer do not, and the execution and delivery of the Ancillary Agreements to which Buyer is a party and the consummation of the transactions contemplated hereby and thereby will not, (i) violate the provisions of any of the Charter Documents of Buyer, (ii) violate any Contract to which Buyer is a party, (iii) to the knowledge of Buyer, violate any Law of any Governmental Entity applicable to Buyer on the date hereof, or (iv) to the knowledge of Buyer, result in the creation of any Liens upon any of the assets owned or used by Buyer, except in each such case where such violation or Lien would not reasonably be expected materially to impair or delay the ability of Buyer to perform its obligations under this Asset Purchase Agreement or the Ancillary Agreements.

(b) No Authorization or Order of, registration, declaration or filing with, or notice to any Governmental Entity is required by Buyer in connection with the execution and delivery of this Asset Purchase Agreement and the Ancillary Agreements to which it is a party and the consummation of the transactions contemplated hereby and thereby, except for the failure to obtain which would not reasonably be expected to materially impair the ability of Buyer to perform its obligations under this Asset Purchase Agreement and the Ancillary Agreements to which Buyer is a party.

5.4 Litigation . There is no Action pending or, to the knowledge of Buyer, threatened against, Buyer which (a) challenges or seeks to enjoin, alter or materially delay the consummation of the transactions contemplated by this Asset Purchase Agreement, or (b) would reasonably be expected to have a material adverse effect on Buyer.

5.5 Availability of Funds . Buyer has cash available or has existing borrowing facilities which together are sufficient to enable it to consummate the transactions contemplated by this Asset Purchase Agreement.

5.6 Brokers or Finders . Buyer represents, as to itself and its Affiliates, that no agent, broker, investment banker or other firm or Person is or will be entitled to any broker’s or finder’s fee or any other commission or similar fee in connection with any of the transactions contemplated by this Asset Purchase Agreement and the Ancillary Agreements.

ARTICLE VI

COVENANTS OF SELLER

6.1 Conduct of Business . During the period from the date of this Asset Purchase Agreement and continuing until the earlier of the termination of this Asset Purchase Agreement or the Closing Date, except with regard to performance of the Foundry Services Agreement or the Ancillary Agreements, or except with the prior written consent of Buyer, such consent not to be unreasonably conditioned, delayed or withheld, Seller shall:

(a) (i) maintain its corporate existence, (ii) pay or perform the Liabilities of the Purchased Assets when due, (iii) operate the Purchased Assets in the Ordinary Course of Business and in accordance with the provisions of this Asset Purchase Agreement and in compliance with all Laws, Business Authorizations and Material Contracts, and (iv) maintain the level and quality of the Equipment Part Inventory and Operational Inventory;

(b) use commercially reasonable efforts consistent with past practices and policies to preserve intact the Facility, keep available the services of its present Facility Employees, subject to Seller’s obligations and other limitations on Seller’s actions set forth in this Asset Purchase Agreement, and preserve its relationships with suppliers, distributors, licensors and others having dealings with the Facility pursuant to Assigned Contracts; provided that Seller is not authorized to, and shall not, make any commitments on behalf of Buyer;

(c) use commercially reasonable efforts to maintain the Real Property and other assets, properties and rights included in the Purchased Assets in the same state of repair, order and conditions as they are on the date hereof, subject to normal wear and tear in the Ordinary Course of Business, and subject to any repairs or replacements and except with respect to Equipment purchased by Seller for non-operational purposes to serve as spare parts;

(d) maintain the Books and Records in accordance with past practice, and use its reasonable efforts to maintain in full force and effect all Business Authorizations and Policies;

(e) (i) confer with Buyer prior to implementing operational decisions of a material nature at the Facility, (ii) report on a regular basis concerning the status of the Purchased Assets, and (iii) promptly notify Buyer of any event or occurrence not in the Ordinary Course of Business; and

(f) use commercially reasonable efforts to (i) operate the Facility and use the other Purchased Assets in such a manner that on the Closing Date the representations and warranties of Seller contained in this Asset Purchase Agreement shall be true and correct, as though such representations and warranties were made on and as of such date, and (ii) cause all of the conditions to the obligations of Buyer under this Asset Purchase Agreement to be satisfied as soon as practicable following the date hereof.

6.2 Negative Covenants . Except as expressly provided in this Asset Purchase Agreement, Seller shall not do any of the following, in each case with respect to the Purchased Assets, without the prior written consent of Buyer, such consent not to be unreasonably conditioned, delayed or withheld:

(a) adopt or propose any amendment to Charter Documents of the Seller that

would reasonably be expected to delay the consummation of the transactions contemplated by this Asset Purchase Agreement;

(b) (i) other than pursuant to a written agreement or Seller Benefit Plan disclosed in the Seller Disclosure Schedule in the amount required thereunder, (A) modify the compensation or benefits payable or to become payable by Seller to any Transferred Employee, or (B) modify any bonus, severance, termination, pension, insurance or other employee benefit plan, payment or arrangement made to, for or with any Transferred Employee, or (ii) enter into any employment, severance or termination agreement with any Transferred Employee;

(c) establish, adopt, enter into, amend or terminate any Seller Benefit Plan or any collective bargaining, thrift, compensation or other plan, agreement, trust, fund, policy or arrangement for the benefit of any Transferred Employee;

(d) sell, lease, transfer or assign any Purchased Assets, except the sale, lease, transfer or assignment (i) of Inventory other than Equipment Part Inventory and Operational Inventory, (ii) of obsolete Equipment, (iii) of Excluded Assets or (iv) in the Ordinary Course of Business;

(e) remove, dispose or replace of any individual piece of Equipment; provided however the use of Equipment purchased by Seller for non-operational purposes to serve as spare parts or maintain existing Equipment shall not constitute the removal, disposal or replacement of any individual piece of Equipment;

(f) mortgage, pledge or subject to Liens, other than Permitted Liens, any Purchased Assets;

(g) amend, modify, cancel or waive any material rights under any Contract which is an Assigned Contract;

(h) be party to any merger, acquisition, consolidation, recapitalization, liquidation, dissolution or similar transaction solely with respect to the Purchased Assets;

(i) take any action or omit to do any act which action or omission will cause it to breach any obligation contained in this Asset Purchase Agreement or cause any representation or warranty of Seller not to be true and correct as of the Closing Date; or

(j) agree, whether in writing or otherwise, to do any of the foregoing.

6.3 Access to Information; Investigation . Subject to the terms of the Confidentiality Agreement by and between Buyer and Seller dated May 20, 2010 (the “ Confidentiality Agreement ”), Seller shall afford to Buyer’s officers, directors, employees, accountants, counsel, consultants, advisors and agents (“ Representatives ”) free and full access to and the right to inspect, during normal business hours, all of the properties, assets, records, Contracts and other documents with respect to the operation and ownership of the Purchased Assets, subject to reasonable policies and procedures at the Facility and requirements not to unreasonably affect the operation of the Facility, and shall permit them to consult with the officers, employees, accountants, counsel and agents of Seller for the purpose of making such investigation of the Purchased Assets as Buyer shall reasonably desire to make. Seller shall furnish to Buyer all such

documents and copies of documents and records and information with respect to the Purchased Assets and copies of any working papers solely relating thereto as Buyer may reasonably request. Without limiting the foregoing, Seller shall permit Buyer and Buyer’s Representatives to conduct environmental due diligence of the Real Property and the other Purchased Assets, including the collecting and analysis of samples of indoor or outdoor air, surface water, groundwater or surface or subsurface land on, at, in, under or from the Facility.

6.4 Confidentiality . From and after the Closing Date until the third anniversary of the Closing Date, unless otherwise required by Law or the rules and regulations of any stock exchange on which such party’s stock is traded or quoted, each party will, and will cause its Affiliates to, hold, and will use its reasonable best efforts to cause its and their respective Representatives to hold, in confidence any and all information, whether written or oral, concerning the Purchased Assets, except to the extent that such party can show that such information (a) is in the public domain through no fault of such party or any of its Affiliates or their respective Representatives, (b) is lawfully acquired by such party or any of its Affiliates after the Closing Date from sources that are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation, (c) was in the possession of such party prior to disclosure by the disclosing party or its Representatives or (d) is developed by such party independent of any confidential information provided hereunder. If a party or any of its Affiliates or Representatives is compelled to disclose any such information by judicial or administrative process or by other requirements of Law, such party shall promptly notify the other party in writing and shall disclose only that portion of such information that such party is advised by its counsel in writing is legally required to be disclosed; provided that such party shall exercise its reasonable efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

6.5 Release of Liens . Prior to the Closing Date, Seller shall cause to be released all Liens other than Permitted Liens in and upon any of the Purchased Assets (all of such Liens are set forth in the Seller Disclosure Schedule).

6.6 Consents . Prior to the Closing Date, Seller shall use commercially reasonable efforts to obtain all Consents that are required under Assigned Contracts in connection with the consummation of the transactions contemplated by this Asset Purchase Agreement.

Notification of Certain Matters , Seller shall give prompt notice to Buyer of (a) any fact, event or circumstance known to it that individually or taken together with all other facts, events and circumstances known to it, has had or would reasonably be expected to have , individually or in the aggregate, a material adverse effect on the Purchased Assets, or would cause or constitute a material breach of any of its representations, warranties, covenants or agreements contained herein, (b) the failure of any condition precedent to Buyer’s obligations hereunder, (c) any notice or other communication from any third party alleging that the consent of such third party is or may be required in connection with the consummation of the transactions contemplated by this Asset Purchase Agreement, (d) any notice or other communication from any Governmental Entity in connection with the consummation of the transactions contemplated by this Asset Purchase Agreement, or (e) the commencement of any Action that, if pending on the date of this Asset Purchase Agreement, would have been required to have been disclosed pursuant to Section 4.12; provided , however , (i) the delivery of any notice pursuant to this Section 6.7 shall not limit or otherwise affect any remedies available to Buyer, pursuant to the terms of this Asset Purchase

Agreement, and (ii) disclosure by Seller shall not be deemed to amend or supplement the Seller Disclosure Schedule or prevent or cure any misrepresentation, breach of warranty or breach of covenant.

6.8 Restrictive Covenants .

(a) Seller covenants that, commencing on the Closing Date and ending on the third anniversary of the Closing Date (the “ Noncompetition Period ”), Seller shall not, and it shall cause its Affiliates not to, directly or indirectly, in any capacity, engage in or have any direct or indirect ownership interest in any business anywhere in the world which is engaged, either directly or indirectly, in the business of developing, manufacturing, marketing or selling any products manufactured using Buyer’s proprietary Diffusion Metal Oxide Semiconductor (“DMOS”) process technology (the “ Seller Restricted Business ”). It is recognized that the Seller Restricted Business is expected to be conducted throughout the world and that more narrow geographical limitations of any nature on this non‑competition covenant are therefore not appropriate.

(b) Buyer covenants that during the Noncompetition Period, Buyer shall not, and it shall cause its Affiliates not to, directly or indirectly, in any capacity, engage in or have any direct or indirect ownership interest in, any business anywhere in the world which is engaged, either directly or indirectly, in the business of developing, manufacturing, marketing or selling any products which are competitive with the products listed in Schedule 6.8(b)(i) that are produced by Seller using the Purchased Assets prior to the Closing, excluding specifically the products listed in Schedule 6.8(b)(ii) that are produced by Buyer prior to the Closing (the “ Buyer Restricted Business ”). For the purpose of clarity, the business of developing, manufacturing, marketing or selling power semiconductor products is not deemed to be a Buyer Restricted Business. The noncompetition obligation of Buyer shall not apply to products exclusively sold to Seller after the Closing. It is recognized that the Buyer Restricted Business is expected to be conducted throughout the world and that more narrow geographical limitations of any nature on this non‑competition covenant are therefore not appropriate.

6.9 Exclusivity . Seller agrees as follows:

(a) Except with respect to the transactions contemplated by this Asset Purchase Agreement, the Seller agrees that it will not, and it will cause its Subsidiaries and its and their respective Representatives not to, (i) initiate, solicit, facilitate, seek, knowingly encourage or induce, directly or indirectly, any inquiries or the making or implementation of any proposal or offer (including, without limitation, any proposal or offer to its stockholders or any of them) from any Person other than Buyer with respect to the sale or disposition of (x) all or substantially all of the Facility or (y) any material Purchased Assts located at the Facility (other than replacement at Seller’s discretion with substantially equivalent assets in good working condition or repair in the Ordinary Course of Business) pursuant to a merger, acquisition, consolidation, recapitalization, liquidation, dissolution, equity investment or similar transaction (any such proposal or offer being hereinafter referred to as a “ Proposal ”), or (ii) engage in any negotiations concerning, or provide any confidential information or data to, or have any substantive discussions with, any Person relating to a Proposal or (iii) enter into or consummate any agreement or understanding with any Person relating to a Proposal.

(b) Except with respect to the transaction contemplated herein, Seller shall

immediately cease and terminate, and it shall cause its Subsidiaries and its and their respective Representatives immediately to cease and terminate, any existing activities, including discussions or negotiations with any parties conducted heretofore with respect to any Proposal.

(c) Seller shall promptly notify Buyer if any inquiries, proposals or offers related to a Proposal are received by, any confidential information or data is requested from, or any negotiations or discussions related to a Proposal are sought to be initiated or continued with, it or any of its Subsidiaries or any of their respective Representatives.

6.10 Vanderzanden Farms . Seller, at its sole cost and expense, shall use commercially reasonable efforts to terminate Vanderzanden Farms’ right to use of the 2.69 acres of the Real Property as disclosed in Schedule 4.10 of the Seller Disclosure Schedule in a writing (i) signed by Seller and (ii) signed by Vanderzanden Farms (the “ Vanderzanden Farms Termination ”).

ARTICLE VII

COVENANTS OF BUYER AND SELLER

7.1 Regulatory Approvals .

(a) Buyer and Seller shall each promptly apply for, and take all reasonably necessary actions to obtain or make, as applicable, all Orders and Authorizations of, and all filings with, any Governmental Entity or other Person required to be obtained or made by it for the consummation of the transactions contemplated by this Asset Purchase Agreement. Each party shall cooperate with and promptly furnish information to the other party necessary in connection with any requirements imposed upon such other party in connection with the consummation of the transactions contemplated by this Asset Purchase Agreement. Buyer and Seller shall each be responsible for one half of all filing and other similar fees payable in connection with such filings and for any local counsel fees.

(b) For the period of six (6) months after the Closing Date, Seller shall use commercially reasonable efforts to assist Buyer in identifying the Business Authorizations (including Environmental Permits) required by Buyer to own and operate the Purchased Assets to manufacture its own products from and after the Closing Date and will either transfer current Business Authorizations (including Environmental Permits) of Seller to Buyer or use commerically reasonably efforts to assist Buyer in obtaining new Authorizations.

7.2 Public Announcements . Neither Buyer nor Seller shall issue any press releases or otherwise make any public statements with respect to the transactions contemplated by this Asset Purchase Agreement; provided , however , that Buyer or Seller may, without such approval, make such press releases or other public announcement as it believes are required pursuant to any listing agreement with any national securities exchange or stock market or applicable securities Laws, in which case the party required to make the release or announcement shall allow the other party reasonable time to comment on such release or announcement in advance of such issuance; provided , further , that each of the parties may make internal announcements to their respective employees that are consistent with the parties’ prior public disclosures regarding the transactions contemplated by this Asset Purchase Agreement.

7.3 Employees .

(a) Promptly following the execution of this Asset Purchase Agreement, Seller shall provide reasonable access to Buyer to the facilities and the personnel records of Seller for Facility Employees the purpose of preparing for and conducting employment interviews with Facility Employees. Buyer shall not be obligated to offer employment to any Facility Employee.

(b) Buyer may offer employment to any Facility Employee on such terms and conditions as it deems appropriate in its sole discretion, such employment to be contingent upon and effective immediately following the Closing; provided that no later than three (3) business days prior to Buyer’s offer of employment to any Facility Employee, Buyer shall provide to Seller written notice of the compensation terms of such offer with respect to title and/or position and cash compensation. Seller shall use commercially reasonable efforts to assist Buyer in employing as new employees of Buyer, all Facility Employees to whom Buyer has offered employment pursuant to this Section 7.3(b). The Facility Employees who accept Buyer’s offer of employment and commence employment with Buyer shall be referred to, collectively, as “ Transferred Employees .” Seller shall terminate the employment of all Transferred Employees with Seller effective immediately prior to the Closing.

(c) Any and all Liabilities relating to or arising out of the employment, or cessation of employment, of any Facility Employee (whether or not a Transferred Employee) on or prior to the close of business on the Closing Date shall be the sole responsibility of Seller including wages and other remuneration due through the close of business on the Closing Date. Notwithstanding the foregoing, Buyer shall assume and honor accrued vacation of Transferred Employees, up to eighty (80) hours of vacation per Transferred Employee (“ Transferred Vacation Benefits ”), to the extent permissible under Law. Should any Transferred Employee request any portion of his or her Transferred Vacation Benefits to be paid out in cash, Buyer shall pay such Transferred Vacation Benefits at a rate of pay equal to the Transferred Employee’s base salary that is in effect at the time of the request.

(d) From and after the Closing Date, Buyer shall offer to Transferred Employees such Benefit Plans and arrangements as it deems appropriate in its sole discretion, provided that , Transferred Employees shall receive credit for their prior service with Seller and its Affiliates, including prior service with predecessor employers where such prior service is recognized by Seller as of immediately prior to the Closing, for purposes of eligibility to participate, vesting and determination of level of benefits (but not to the extent that such recognition would result in duplication of benefits or with respect to any defined benefit plan) in Benefit Plans (other than under an equity, equity derivative or deferred compensation plan, program or policy) offered by Buyer and shall be entitled to enjoy the benefits available to similarly situated Buyer employees. From and after the Closing Date, Buyer shall use commercially reasonable efforts to cause any pre-existing conditions or limitations and eligibility waiting periods under any group health plans of Buyer or its Affiliates to be waived with respect to Transferred Employees and their eligible dependents to the extent such Transferred Employees and their eligible dependents were not subject to such preexisting conditions and limitations and eligibility waiting periods under the comparable Seller Benefit Plans as of immediately

preceding the Closing. Buyer shall not assume any Liability under any of the Seller Benefit Plans.

(e) All Transferred Employees shall become vested in their accrued benefits per Seller’s benefit vesting schedule under Seller’s pension benefit plans as of the Closing Date, and Seller shall retain Liability for the payment of such accrued benefits in accordance with the terms of such pension benefit plans.

(f) Seller shall be liable for any severance, separation, deferred compensation or similar benefits that are payable (i) to any Person who is or was an employee of Seller and who is not a Transferred Employee, including any Facility Employee whose employment was terminated prior to the Closing (“ Seller Employees ”), and (ii) to Transferred Employees, to the extent that such Transferred Employee’s right to severance, separation, deferred compensation or similar benefits arises under a Seller Benefit Plan as a result of the transactions contemplated by this Asset Purchase Agreement and the Ancillary Agreements.

(g) Seller shall be liable for the administration and payment of all workers’ compensation Liabilities and benefits with respect to (i) Transferred Employees to the extent resulting from claims, events, circumstances, exposures, conditions or occurrences occurring on or prior to the Closing, and (ii) Seller Employees. Buyer shall be liable for the administration and payment of all workers’ compensation Liabilities and benefits with respect to Transferred Employees to the extent resulting from claims, events, circumstances, exposures, conditions or occurrences occurring after the Closing Date.

(h) Seller shall be liable for the administration and payment of all health and welfare Liabilities and benefits under the Seller Benefit Plans with respect to (i) Transferred Employees to the extent resulting from claims, events, circumstances, exposures, conditions or occurrences occurring on or prior to the Closing, and (ii) Seller Employees. Buyer shall be liable for the administration and payment of all health and welfare Liabilities and benefits under Buyer’s Benefit Plans with respect to Transferred Employees participating therein to the extent resulting from claims, events, circumstances, exposures, conditions or occurrences occurring after the Closing Date.

(i) Seller shall retain and perform all Liabilities and maintain all insurance under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“ COBRA ”) with respect to Seller Employees and their covered dependents; provided that Buyer shall perform all of its obligations under COBRA with respect to Transferred Employees and their covered dependents that become eligible for COBRA after the Closing Date.

(j) Except as expressly set forth in this Section 7.3 with respect to Transferred Employees, Buyer shall have no obligation with respect to any Facility Employee or any other employee of Seller.

(k) Nothing in this Asset Purchase Agreement confers upon any Facility Employee or Transferred Employee any rights or remedies of any nature or kind whatsoever under or by reason of this Section 7.3. Nothing in this Asset Purchase Agreement shall limit the

right of Buyer to terminate or reassign any Transferred Employee after the Closing or to change the terms and conditions of his or employment in any manner.

7.4 Taxes .

(a) Seller shall pay fifty percent (50%) and Buyer shall pay fifty percent (50%) of all transfer taxes, including all federal, state and local sales, documentary and real estate and other transfer Taxes, if any, due as a result of the purchase, sale or transfer of the Purchased Assets in accordance herewith whether imposed by Law on Seller or Buyer.

(b) All real property Taxes, personal property Taxes and similar ad valorem obligations levied with respect to the Purchased Assets for a taxable period that includes (but does not end on) the Closing Date shall be apportioned between Seller and Buyer as of the Closing Date based on the number of days of such taxable period included in the period ending with and including the Closing Date (with respect to any such taxable period, the “ Pre-Closing Tax Period ”), and the number of days of such taxable period beginning after the Closing Date (with respect to any such taxable period, the “ Post-Closing Tax Period ”). Seller shall be liable for the proportionate amount of such Taxes that is attributable to the Pre-Closing Tax Period, and Buyer shall be liable for the proportionate amount of such Taxes that is attributable to the Post-Closing Tax Period. If bills for such Taxes have not been issued as of the Closing Date, and, if the amount of such Taxes for the period including the Closing Date is not then known, the estimated apportionment of such Taxes shall be made at Closing on the basis of the prior period’s Taxes. After Closing, upon receipt of bills for the period including the Closing Date, adjustments to the apportionment shall be made by the parties, so that if either party would otherwise bear more than its proper share as a result of the estimated apportionment made at the Closing, the other party shall promptly reimburse such party.

(c) Buyer and Seller agree to furnish or cause to be furnished to each other, upon request, as promptly as practicable, such information and assistance relating to the Purchased Assets and Assumed Liabilities (including access to books and records) as is reasonably necessary for the filing of all Tax Returns, the making of any election relating to Taxes, the preparation for any audit by any Taxing Authority, and the prosecution or defense of any Action relating to any Tax. Any expenses incurred in furnishing such information or assistance shall be borne by the party requesting it.

7.5 Bulk Sales Laws . Buyer and Seller hereby waive compliance by Buyer and Seller with the bulk sales Law and any other similar Laws in any applicable jurisdiction in respect of the transactions contemplated by this Asset Purchase Agreement and the Ancillary Agreements.

7.6 Discharge of Business Obligations After Closing . From and after the Closing, if Seller or any of its Affiliates receives or collects any funds relating to any Purchased Asset, Seller or its Affiliate shall remit such funds to Buyer within thirty (30) Business Days after its receipt thereof. From and after the Closing, if Buyer receives or collects any funds relating to any Excluded Asset, Buyer shall remit any such funds to Seller within thirty (30) Business Days after its receipt thereof.

7.7 Access to Books and Records . Each of Seller and Buyer shall preserve until the tenth anniversary of the Closing Date all records possessed or to be possessed by such party

relating to any of the Purchased Assets, Liabilities or operation of the Facility prior to the Closing. After the Closing Date, where there is a legitimate business purpose, such party shall provide the other party with access, upon prior reasonable written request specifying the need therefor, during regular business hours, to (i) the officers and employees of such party and (ii) the books of account and records of such party, but, in each case, only to the extent relating to the assets, Liabilities or operation of the Facility prior to the Closing, and the other party and its Representatives shall have the right to make copies of such books and records at their sole cost; provided , however , that the foregoing right of access shall not be exercisable in such a manner as to interfere unreasonably with the normal operations and business of such party or to permit Buyer access to any books and records relating to Taxes of Seller. Such records may nevertheless be destroyed by a party if such party sends to the other party written notice of its intent to destroy records, specifying with particularity the contents of the records to be destroyed. Such records may then be destroyed after the 30th day after such notice is given unless the other party objects to the destruction in which case the party seeking to destroy the records shall deliver such records to the objecting party at the objecting party’s cost.

7.8 Further Assurances . Buyer and Seller shall execute such documents and other instruments and take such further actions as may be reasonably required or desirable to carry out the provisions of this Asset Purchase Agreement and the Ancillary Agreements and to consummate the transactions contemplated hereby and thereby. Upon the terms and subject to the conditions hereof, Buyer and Seller shall each use its respective reasonable best efforts to (a) take or cause to be taken all actions and to do or cause to be done all other things necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Asset Purchase Agreement and the Ancillary Agreements and (b) obtain in a timely manner all Consents and Authorizations and effect all necessary registrations and filings. From time to time after the Closing, at Buyer’s request, Seller shall execute, acknowledge and deliver to Buyer such other instruments of conveyance and transfer and will take such other actions and execute and deliver such other documents, certifications and further assurances as Buyer may reasonably require in order to vest more effectively in Buyer, or to put Buyer more fully in possession of, any of the Purchased Assets. Seller and Buyer shall use commercially reasonable efforts to consummate the Closing by January 31, 2012.

ARTICLE VIII

CONDITIONS TO CLOSING

8.1 Conditions to Obligations of Buyer and Seller . The obligations of Buyer and Seller to consummate the transactions contemplated by this Asset Purchase Agreement are subject to the satisfaction on or prior to the Closing Date of the following conditions:

(a) All Authorizations and Orders of, declarations and filings with, and notices to any Governmental Entity, required to permit the consummation of the transactions contemplated by this Asset Purchase Agreement and set forth on Schedule 8.1(a) shall have been obtained or made and shall be in full force and effect.

(b) No temporary restraining order, preliminary or permanent injunction or other Order preventing the consummation of the transactions contemplated by this Asset

Purchase Agreement shall be in effect. No Law shall have been enacted or shall be deemed applicable to the transactions contemplated by this Asset Purchase Agreement which makes the consummation of such transactions illegal.

8.2 Conditions to Obligation of Buyer . The obligation of Buyer to consummate the transactions contemplated by this Asset Purchase Agreement is subject to the satisfaction (or waiver by Buyer in its sole discretion) of the following further conditions:

(a) The representations and warranties of Seller set forth in Article IV (i) that are not qualified by “material adverse effect” or other materiality qualifications shall have been true and correct in all material respects at and as of the date hereof and shall be true and correct in all material respects at and as of the Closing Date as if made at and as of the Closing Date, except to the extent that such representations and warranties refer specifically to an earlier date, in which case such representations and warranties shall have been true and correct as of such earlier date, and (ii) that are qualified by “material adverse effect” or other materiality qualifications shall have been true and correct in all respects at and as of the date hereof and shall be true and correct in all respects at and as of the Closing Date as if made at and as of the Closing Date, except to the extent that such representations and warranties refer specifically to an earlier date, in which case such representations and warranties shall have been true and correct as of such earlier date.

(b) Seller shall have performed or complied in all material respects with all obligations and covenants required by this Asset Purchase Agreement to be performed or complied with by Seller at or prior to the Closing.

(c) Buyer shall have received a certificate dated the Closing Date signed on behalf of Seller by the President of Seller to the effect that the conditions set forth in Sections 8.2(a) and 8.2(b) have been satisfied (the “ Seller Closing Certificate ”).

(d) There shall have been no material adverse change in the condition of the Purchased Assets taken as a whole; provided however, that none of the following (individually or in combination) shall be deemed to constitute, or shall be taken into account in determining whether there has been, a material adverse change: (a) any adverse change resulting from any action taken by Buyer; (b) any action taken or any action not taken by Seller in compliance with its covenants and obligations contained in this Asset Purchase Agreement; or (c) any action taken or any action not taken by Seller at the written request or with the written consent of Buyer.

(e) No Action shall be pending or threatened before any court or other Governmental Entity or before any other Person wherein an unfavorable Order would (i) prevent consummation of any of the transactions contemplated by this Asset Purchase Agreement or the Ancillary Agreements, (ii) affect adversely the right of Buyer to own the Purchased Assets or (iii) restrain or prohibit Buyer’s ownership or operation (or that of its Subsidiaries or Affiliates) of all or any material portion of the Facility or Purchased Assets, or compel Buyer or any of its Subsidiaries or Affiliates to dispose of or hold separate all or any material portion of the Facility or Purchased Assets or all or any material portion of the business and assets of Buyer and its Subsidiaries. No such Order shall be in effect.

(f) No Law shall have been enacted or shall be deemed applicable to the

transactions contemplated by this Asset Purchase Agreement or the Ancillary Agreements which has any of the effects set forth in clauses (i) through (iii) in Section 8.2(e).

(g) Buyer shall have received (i) an owner’s title insurance policy issued by a nationally recognized insurance company with respect to each parcel of Real Property listed on Schedule 8.2(g) (the “ Insured Real Properties ”), issued as of the Closing Date in an amount based on the amount of the Purchase Price to be allocated to the Real Property to be mutually and reasonably agreed upon by Seller and Buyer for the purposes of this Section 8.2(g), insuring Buyer’s fee simple title to each Insured Real Property free of all Liens except Permitted Liens and standard title policy exceptions, and (ii) a certified ALTA/ACSM Land Title Survey for each of the Insured Real Properties, in form and substance satisfactory to Buyer that shall not reveal any condition not permitted by Section 4.10(b)(i). Seller shall be responsible for the costs related to the owner’s title insurance policy referenced in the forgoing clause (i) and Buyer and Seller shall each be responsible for fifty percent (50%) of the costs related to the ALTA/ACSM Land Title Survey referenced in the forgoing clause (ii). Buyer shall be responsible for the cost of extended coverage and any endorsements to the title policy.

(h) Seller shall have obtained the Consent of each Person whose Consent is required under the Contracts set forth in Schedule 8.2(h) and shall have provided evidence of each such Consent in form and substance satisfactory to Buyer.

(i) Buyer shall have received (i) all material Authorizations (including any Environmental Permits) that are necessary for it to operate the Purchased Assets to manufacture its own products, or (ii) reasonable assurances from relevant Governmental Entities that Buyer may operate under Seller’s Authorizations until such time that Buyer receives its own Authorizations and Seller provides consent to such use.

(j) Seller shall have delivered to Buyer all agreements and other documents required to be delivered by Seller to Buyer pursuant to Section 3.2 of this Asset Purchase Agreement.

(k) Buyer shall have received a certificate of the Secretary of Seller dated the Closing Date and certifying: (A) that attached thereto are true and complete copies of all resolutions adopted by the Board of Directors in connection with the transactions contemplated by this Asset Purchase Agreement and the Ancillary Agreements, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated by this Asset Purchase Agreement and the Ancillary Agreements; and (B) to the incumbency and specimen signature of each officer of Seller executing this Asset Purchase Agreement and/or the Ancillary Agreements, and a certification by another officer of Seller as to the incumbency and signature of the Secretary of Seller.

(l) Buyer shall have received evidence in form and substance satisfactory to Buyer that all Liens other than Permitted Liens with respect to the Purchased Assets have been released.

(m) Seller shall have obtained the Vanderzanden Farms Termination.

8.3 Conditions to Obligation of Seller . The obligation of Seller to consummate the

transactions contemplated by this Asset Purchase Agreement is subject to the satisfaction (or waiver by Seller in its sole discretion) of the following further conditions:

(a) The representations and warranties of Buyer set forth in Article V (i) that are not qualified by “material adverse effect” or other materiality qualifications shall have been true and correct in all material respects at and as of the date hereof and shall be true and correct in all material respects at and as of the Closing Date as if made at and as of the Closing Date, except to the extent that such representations and warranties refer specifically to an earlier date, in which case such representations and warranties shall have been true and correct as of such earlier date, and (ii) that are qualified by “material adverse effect” or other materiality qualifications shall have been true and correct in all respects at and as of the date hereof and shall be true and correct in all respects at and as of the Closing Date as if made at and as of the Closing Date, except to the extent that such representations and warranties refer specifically to an earlier date, in which case such representations and warranties shall have been true and correct as of such earlier date.

(b) Buyer shall have performed or complied in all material respects with all obligations and covenants required by this Asset Purchase Agreement to be performed or complied with by Buyer at or prior to the Closing.

(c) Seller shall have received a certificate dated the Closing Date signed on behalf of Buyer by the President of Buyer to the effect that the conditions set forth in Section 8.3(a) and 8.3(b) have been satisfied (the “ Buyer Closing Certificate ”).

(d) No Action shall be pending or threatened before any court or other Governmental Entity or other Person wherein an unfavorable Order would (i) prevent consummation of any of the transactions contemplated by this Asset Purchase Agreement and the Ancillary Agreements or (ii) cause any of the transactions contemplated by this Asset Purchase Agreement and the Ancillary Agreements to be rescinded following consummation. No such Order shall be in effect.

(e) Buyer shall have delivered to Seller all agreements and other documents required to be delivered by Buyer to Seller pursuant to Section 3.3 of this Asset Purchase Agreement.

(f) Seller shall have received a certificate of the Secretary of Buyer dated the Closing Date and certifying: (A) that attached thereto are true and complete copies of all resolutions adopted by the Board of Directors of Buyer in connection with the transactions contemplated by this Asset Purchase Agreement and the Ancillary Agreements, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated by this Asset Purchase Agreement and the Ancillary Agreements; and (B) to the incumbency and specimen signature of each officer of Buyer executing this Asset Purchase Agreement and the Ancillary Agreements to which it is a party, and a certification by another officer of Buyer as to the incumbency and signature of the Secretary of Buyer.

ARTICLE IX

TERMINATION

9.1 Termination .

(a) This Asset Purchase Agreement may be terminated at any time prior to the Closing:

(i) by mutual written consent of Buyer and Seller;

(ii) by Buyer or Seller if:

(A) the Closing does not occur on or before January 31, 2012; provided that the right to terminate this Asset Purchase Agreement under this clause (ii)(A) shall not be available to any party whose breach of a representation, warranty, covenant or agreement under this Asset Purchase Agreement has been the cause of or resulted in the failure of the Closing to occur on or before such date; or

(B) a Governmental Entity shall have issued an Order or taken any other action, in any case having the effect of permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Asset Purchase Agreement, which Order or other action is final and non-appealable;

(iii) by Buyer if:

(A) any condition to the obligations of Buyer hereunder becomes incapable of fulfillment other than as a result of a breach by Buyer of any covenant or agreement contained in this Asset Purchase Agreement, and such condition is not waived by Buyer; or

(B) there has been a material breach by Seller of any representation, warranty, covenant or agreement contained in this Asset Purchase Agreement, and such breach shall not have been cured within ten (10) Business Days after receipt by Seller of written notice of such breach; or

(iv) by Seller if:

(A) any condition to the obligations of Seller hereunder becomes incapable of fulfillment other than as a result of a breach by Seller of any covenant or agreement contained in this Asset Purchase Agreement, and such condition is not waived by Seller; or

(B) there has been a material breach by Buyer of any representation, warranty, covenant or agreement contained in this Asset Purchase Agreement, and such breach shall not have been cured within ten (10) Business Days after receipt by Buyer of written notice of such breach.

(b) The party desiring to terminate this Asset Purchase Agreement pursuant to clause (ii), (iii) or (iv) shall give written notice of such termination to the other party hereto.

9.2 Effect of Termination . In the event of termination of this Asset Purchase Agreement as provided in Section 9.1, this Asset Purchase Agreement shall immediately become

null and void and there shall be no Liability or obligation on the part of Seller or Buyer or their respective officers, directors, stockholders or Affiliates, except as set forth in Section 9.3; provided , however , the provisions of Section 6.4 (Confidentiality), Section 7.2 (Public Announcements) and Section 9.3 (Remedies) and Article X of this Asset Purchase Agreement shall remain in full force and effect and survive any termination of this Asset Purchase Agreement.

9.3 Remedies . Any party terminating this Asset Purchase Agreement pursuant to Section 9.1 shall have the right to recover damages sustained by such party as a result of any breach by the other party of any representation, warranty, covenant or agreement contained in this Asset Purchase Agreement or fraud or willful misrepresentation; provided , however , that the party seeking relief is not in breach of any representation, warranty, covenant or agreement contained in this Asset Purchase Agreement under circumstances which would have permitted the other party to terminate the Agreement under Section 9.1.

ARTICLE X

INDEMNIFICATION

10.1 Survival .

(a) Except as set forth in Section 10.1(b), all representations and warranties contained in this Asset Purchase Agreement, the Ancillary Agreements, any Schedule, certificate or other document delivered pursuant to this Asset Purchase Agreement or the Ancillary Agreements, shall survive the Closing for a period of one (1) year.

(b) The representations and warranties of Seller contained in Sections 4.1 (Organization and Good Standing), 4.2 (Authority and Enforceability), 4.14 (Sufficiency of Purchased Assets) and 4.21 (Brokers or Finders), and the representations and warranties of Buyer contained in Sections 5.1 (Organization and Good Standing), 5.2 (Authority and Enforceability) and 5.6 (Brokers or Finders) shall survive the Closing until sixty (60) days after the expiration of the applicable statute of limitations (after giving effect to any waivers and extensions thereof). The representations and warranties of Seller contained in Section 4.18 (Environmental) shall survive the Closing for five (5) years.

(c) The covenants and agreements which by their terms do not contemplate performance after the Closing shall survive the Closing for a period of one (1) year. The covenants and agreements which by their terms contemplate performance after the Closing Date shall survive until the expiration of the applicable statute of limitations, unless otherwise expressly provided for by their terms.

(d) The period for which a representation or warranty, covenant or agreement survives the Closing is referred to herein as the “ Applicable Survival Period .” Any claim for indemnification under Section 10.2(a)(i) and (ii) or 10.3(a)(i) and (ii) must be asserted by written notice within the Applicable Survival Period and in the event a notice of claim for indemnification under Section 10.2 or 10.3 is given within the Applicable Survival Period, the representation or warranty, covenant or agreement that is the subject of such indemnification claim (whether or not formal legal action shall have been commenced based upon such claim)

shall survive with respect to such claim until such claim is finally resolved. The Indemnitor shall indemnify the Indemnitee for all Losses (subject to the limitations set forth herein, if applicable) that the Indemnitee may incur in respect of such claim, regardless of when incurred.

10.2 Indemnification by Seller .

(a) Seller shall indemnify and defend Buyer and its Affiliates and their respective stockholders, members, managers, officers, directors, employees, agents, successors and assigns (the “ Buyer Indemnitees ”) against, and shall hold them harmless from, any and all losses, damages, claims (including third party claims), charges, interest, penalties, Taxes, costs and expenses (including legal, consultant, accounting and other professional fees, and fees and costs incurred in enforcing rights under this Section 10.2, but excluding any special, indirect, incidental, consequential, exemplary and punitive damages, and any damages associated with any lost profits or lost opportunities (including loss of future revenue, income or profits, diminution of value or loss of business reputation)) (collectively, “ Losses ”) resulting from or incurred by any Buyer Indemnitee as a proximate cause of:

(i) the failure of any representation and warranty made by Seller contained in Article IV of this Asset Purchase Agreement and the Seller Closing Certificate to be furnished to Buyer in connection with the transactions contemplated by this Asset Purchase Agreement to be true and correct in all respects as of the date of this Asset Purchase Agreement and as of the Closing Date as though such representation and warranty were made as of the Closing Date (except in the case of representations and warranties which by their terms speak only as of a specific date or dates, which representations and warranties shall be true and correct as of such date);

(ii) any breach of any covenant or agreement of Seller contained in this Asset Purchase Agreement;

(iii) any Excluded Liability;

(iv) any fees, expenses or other payments incurred or owed by Seller to any agent, broker, investment banker or other firm or person retained or employed by it in connection with the transactions contemplated by this Asset Purchase Agreement and the Ancillary Agreements; and

(v) violation of fraudulent transfer Laws or the failure to comply with any bulk sales Laws or similar Laws by Seller in connection with the transactions contemplated by this Asset Purchase Agreement.

Notwithstanding anything herein to the contrary, in determining the amount of any Losses with respect to a breach of a representation or warranty by Seller for purposes of Section 10.2(a)(i), such representations and warranties shall be read without regard to any materiality qualifier, including any reference to material adverse effect (except where any such provision requires disclosure of lists of items of a material nature or above a specified threshold), contained therein.

(b) Seller shall not be liable for any Loss or Losses pursuant to Section 10.2(a)(i) (“ Buyer Warranty Losses ”) (i) unless and until the aggregate amount of all Buyer

Warranty Losses incurred by the Buyer Indemnitees exceeds two hundred fifty thousand Dollars ($250,000), in which event Seller shall be liable for all Buyer Warranty Losses from the first dollar.

(c) The maximum aggregate liability of Seller under Section 10.2(a)(i) and Section 10.2(a)(ii) shall not exceed the Cap Amount; provided however the Cap Amount shall not apply to, or otherwise reduce or limit a Buyer’s recovery for, any Losses resulting from or in connection with indemnification claims made pursuant to Section 10.2(a)(ii) for breaches of Seller’s obligations set forth in Sections 6.2(d), 6.2(e), 6.2(i), 6.8(a) and 6.9(a) (the “ Seller Fundamental Covenants ”). The maximum aggregate liability of Seller with respect to Losses resulting from or in connection with indemnification claims made pursuant to Section 10.2(a)(i) and Section 10.2(a)(ii), as limited by the foregoing sentence, and Section 10.2(a)(ii) in respect of the Seller Fundamental Covenants shall not exceed the Purchase Price. Notwithstanding anything to the contrary elsewhere in this Asset Purchase Agreement, nothing contained in Sections 10.2(b) and 10.2(c) shall be deemed to limit or restrict in any manner any rights or remedies which Buyer has, or might have, at Law, in equity or otherwise, based on fraud or a willful misrepresentation hereunder.

10.3 Indemnification by Buyer .

(a) Buyer shall indemnify and defend Seller and its Affiliates and their respective stockholders, members, managers, officers, directors, employees, agents, successors and assigns (the “ Seller Indemnitees ”) against, and shall hold them harmless from, any and all Losses resulting from, arising out of, or incurred by any Seller Indemnitee in connection with, or otherwise with respect to:

(i) the failure of any representation and warranty or other statement by Buyer contained in Article V of this Asset Purchase Agreement and the Buyer Closing Certificate to be furnished to Seller in connection with the transactions contemplated by this Asset Purchase Agreement to be true and correct in all respects as of the date of this Asset Purchase Agreement and as of the Closing Date as though such representation or warranty were made as of the Closing Date (except in the case of representations and warranties which by their terms speak only as of a specific date or dates, which representations and warranties shall be true and correct as of such date),

(ii) any breach of any covenant or agreement of Buyer contained in this Asset Purchase Agreement; and

(iii) any failure to perform when due the Assumed Liabilities.

(b) Buyer shall not be liable for any Loss or Losses pursuant to Section 10.3(a)(i) (“ Seller Warranty Losses ”) unless and until the aggregate amount of all Seller Warranty Losses incurred by the Seller Indemnitees exceeds two hundred fifty thousand Dollars ($250,000), in which event Buyer shall be liable for all Seller Warranty Losses from the first dollar.

(c) The maximum aggregate liability of Buyer under Section 10.3(a)(i) shall not exceed the Cap Amount. Notwithstanding anything to the contrary elsewhere in this Asset

Purchase Agreement, nothing contained in Sections 10.3(b) and 10.3(c) shall be deemed to limit or restrict in any manner any rights or remedies which Seller has, or might have, at Law, in equity or otherwise, based on fraud or a willful misrepresentation hereunder.

10.4 Deduction of IDT Insurance Proceeds Received By AOS . Without limiting the effect of any other limitation contained in this Article X, for purposes of computing the amount of any Losses incurred by Buyer under this Article X, there shall be deducted an amount equal to the amount of any insurance proceeds actually received by Buyer or any of its Affiliates under any IDT policy to which Buyer is entitled under Section 2.1(i) in connection with such Losses or any of the circumstances giving rise thereto. For the avoidance of doubt, there shall be no amount deducted for any self-insurance or for proceeds or recovery under any insurance obtained by Buyer at its own expense.

10.5 Indemnification Procedures for Third Party Claims .

(a) In the event that an Indemnitee receives notice of the assertion of any claim or the commencement of any Action by a third party in respect of which indemnity may be sought under the provisions of this Article X (“ Third Party Claim ”), the Indemnitee shall promptly notify the Indemnitor in writing of such Third Party Claim (“ Notice of Claim ”). Failure or delay in notifying the Indemnitor will not relieve the Indemnitor of any Liability it may have to the Indemnitee, except and only to the extent that such failure or delay causes actual harm to the Indemnitor with respect to such Third Party Claim. The Notice of Claim shall set forth the amount, if known, or, if not known, an estimate of the foreseeable maximum amount of claimed Losses (which estimate shall not be conclusive of the final amount of such Losses) and a description of the basis for such Third Party Claim.

(b) Subject to the further provisions of this Section 10.5, the Indemnitor will have twenty (20) days (or less if the nature of the Third Party Claim requires) from the date on which the Indemnitor received the Notice of Claim to notify the Indemnitee that the Indemnitor will assume the defense or prosecution of such Third Party Claim and any litigation resulting therefrom with counsel of its choice and at its sole cost and expense (a “ Third Party Defense ”). If the Indemnitor assumes the Third Party Defense in accordance with this Section 10.5(b), (i) the Indemnitor shall be conclusively deemed to have acknowledged that the Third Party Claim is within the scope of its indemnity obligation hereunder and shall hold the Indemnitee harmless from and against the full amount of any Losses resulting therefrom (subject to the terms and conditions of this Asset Purchase Agreement); (ii) the attorneys’ fees, other professionals’ and experts’ fees and court or arbitration costs incurred by the Indemnitor in connection with defending such Third Party Claim shall be payable by such Indemnitor; (iii) the Indemnitor shall diligently defend such Third Party Claim; (iv) the Indemnitee shall not be entitled to be indemnified for any costs or expenses incurred by the Indemnitee in connection with the defense of such Third Party Claim; (v) the Indemnitee shall be entitled to monitor and participate in such defense at its sole expense; (vi) the Indemnitee shall make available to the Indemnitor all books, records and other documents and materials that are under the direct or indirect control of the Indemnitee or any of its Subsidiaries or other Affiliates and that the Indemnitor considers necessary or desirable for the defense of such Third Party Claim; (vii) the Indemnitee shall execute such documents and take such other actions as the Indemnitor may reasonably request for the purpose of facilitating the defense of, or any settlement, compromise or adjustment relating to, such Third Party Claim; (viii) the Indemnitee shall otherwise fully cooperate as

reasonably requested by the Indemnitor in the defense of such Third Party Claim; and (ix) the Indemnitee shall not admit any liability with respect to such Third Party Claim.

(c) The Indemnitor will not be entitled to assume (or in the case of Section 10.5(c)(iv), to continue to be entitled to assume) the Third Party Defense if:

(i) the Third Party Claim seeks, in addition to or in lieu of monetary damages, any injunctive or other equitable relief (except where non-monetary relief is merely incidental to a primary claim or claims for monetary damages);

(ii) the Third Party Claim relates to or arises in connection with any criminal proceeding, action, indictment, allegation or investigation;

(iii) the Third Party Claim would reasonably be expected to give rise to Losses which are more than the amount indemnifiable by the Indemnitor pursuant to this Article X; or

(iv) upon petition by the Indemnitee, the appropriate court rules that the Indemnitor failed or is failing to vigorously prosecute or defend such Third Party Claim.

(d) The Indemnitor will not consent to the entry of any judgment or enter into any settlement except with the written consent of the Indemnitee (which consent shall not be unreasonably withheld, conditioned or delayed) to which the Indemnitor is obligated to furnish indemnification pursuant to this Asset Purchase Agreement; provided that the consent of the Indemnitee shall not be required if all of the following conditions are met: (i) the terms of the judgment or proposed settlement include as an unconditional term thereof the giving to the Indemnitees by the third party of a release of the Indemnitees from all Liability in respect of such Third Party Claim, (ii) there is no finding or admission of (A) any violation of Law by the Indemnitees (or any Affiliate thereof), (B) any violation of the rights of any Person and (C) no effect on any other Action or claims of a similar nature that may be made against the Indemnitees (or any Affiliate thereof), and (iii) the sole form of relief is monetary damages which are paid in full by the Indemnitor. Notwithstanding the foregoing, the Indemnitee shall have the right to pay or settle any such Third Party Claim; provided that , in such event, subject to the following sentence, it shall waive any right to indemnity therefor by the Indemnitor for such claim unless the Indemnitor shall have consented to such payment or settlement (such consent not to be unreasonably withheld or delayed).

(e) In the event that (i) an Indemnitee gives Notice of Claim to the Indemnitor and the Indemnitor fails or elects not to assume a Third Party Defense which the Indemnitor had the right to assume under this Section 10.5, (ii) the Indemnitor is not entitled to assume the Third Party Defense pursuant to this Section 10.5 or (iii) the Indemnitee and the Indemnitor are both named parties to the Proceedings and the Indemnitee reasonably concludes that the representation of both parties by the same counsel would be inappropriate due to the actual or potential differing interests between the Indemnitor and the Indemnitee, the Indemnitee shall have the right, with counsel of its choice, to defend, conduct and control the Third Party Defense. In each case, the Indemnitee shall conduct the Third Party Defense actively and diligently, and

the Indemnitor will provide reasonable cooperation in the Third Party Defense. The Indemnitee shall have the right to consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim on such terms as it may deem appropriate; provided , however , that the amount of any settlement made or entry of any judgment consented to by the Indemnitee without the consent of the Indemnitor shall not be determinative of the validity of the claim, except with the consent of the Indemnitor (not to be unreasonably withheld or delayed). If the Indemnitor does not elect to assume a Third Party Defense which it has the right to assume hereunder, the Indemnitee shall have no obligation to do so.

(f) Each party to this Asset Purchase Agreement shall use commercially reasonable efforts to cooperate and to cause its employees to cooperate with and assist the Indemnitee or the Indemnitor, as the case may be, in connection with any Third Party Defense, including attending conferences, discovery proceedings, hearings, trials and appeals and furnishing records, information and testimony, as may reasonably be requested; provided that each party shall use its best efforts, in respect of any Third Party Claim of which it has assumed the defense, to preserve the confidentiality of all confidential information and the attorney-client and work-product privileges.

10.6 Indemnification Procedures for Non-Third Party Claims . In the event of a claim that does not involve a Third Party Claim being asserted against it, the Indemnitee shall send a Notice of Claim to the Indemnitor. The Notice of Claim shall set forth the amount, if known, or, if not known, an estimate of the foreseeable maximum amount of claimed Losses (which estimate shall not be conclusive of the final amount of such Losses) and a description of the basis for such claim. The Indemnitor will have 30 days from receipt of such Notice of Claim to dispute the claim and the Indemnitor and the Indemnitee will reasonably cooperate and assist each other in determining the validity of the claim for indemnity. If the Indemnitor does not give notice to the Indemnitee that it disputes such claim within 30 days after its receipt of the Notice of Claim, the claim specified in such Notice of Claim will be conclusively deemed a Loss subject to indemnification hereunder.

10.7 Escrow Fund . At the Closing, the Escrow Fund shall be delivered to the Escrow Agent to be held and administered by the Escrow Agent in accordance with the terms of the Escrow Agreement. In addition to any other remedies Buyer may have for Losses described in Section 10.2 hereof, Buyer may make a claim against the Escrow Fund for the amount of such Losses by sending a Notice of Claim described in Section 10.5 or 10.6 to the Escrow Agent. Buyer’s recourse to the Escrow Fund shall be without prejudice to any and all other remedies Buyer may have pursuant to this Article X or otherwise. Buyer’s remedies for Losses shall not be limited to the assets comprising the Indemnity Escrow Fund. Following the date that is one (1) year following the Closing Date, Seller shall be entitled to receive the remaining portion of the Escrow Fund, if any, as determined in accordance with the Escrow Agreement.

10.8 Contingent Claims . Nothing herein shall be deemed to prevent an Indemnitee from making a claim hereunder for potential or contingent claims or demands; provided that the Notice of Claim sets forth the specific basis for any such contingent claim to the extent then feasible and the Indemnified Party has reasonable grounds to believe that such a claim may be made.

10.9 Effect of Investigation; Waiver . An Indemnitee’s right to indemnification or other

remedies based upon the representations and warranties and covenants and agreements of the Indemnitor will not be affected by any investigation or knowledge of the Indemnitee or any waiver by the Indemnitee of any condition based on the accuracy of any representation or warranty, or compliance with any covenant or agreement. Such representations and warranties and covenants and agreements shall not be affected or deemed waived by reason of the fact that the Indemnitee knew or should have known that any representation or warranty might be inaccurate or that the Indemnitor failed to comply with any agreement or covenant. Any investigation by such party shall be for its own protection only and shall not affect or impair any right or remedy hereunder.

10.10 Remedies . Subsequent to the Closing, the remedies in this Article X shall be the sole and exclusive remedies of the parties with respect to any breach of the respective representations, warranties, covenants and agreements pursuant to this Asset Purchase Agreement or otherwise arising out of this Asset Purchase Agreement, regardless of the theory or cause of action pled except for the remedies of specific performance, injunction and other equitable relief. Notwithstanding anything to the contrary elsewhere in this Asset Purchase Agreement, nothing contained in this Section 10.10 shall be deemed to limit or restrict in any manner any rights or remedies which each party has, or might have, at Law, in equity or otherwise, based on fraud or a willful misrepresentation of or by the other party.

10.11 Limitation on Damages. NOTWITHSTANDING ANYTHING TO THE CONTRARY ELSEWHERE IN THIS ASSET PURCHASE AGREEMENT OR PROVIDED FOR UNDER ANY APPLICABLE LAW, NO PARTY NOR ANY CURRENT OR FORMER STOCKHOLDER, DIRECTOR, OFFICER, EMPLOYEE, AFFILIATE OR ADVISOR OF ANY OF THE FOREGOING, SHALL, IN ANY EVENT, BE LIABLE TO ANY OTHER PERSON, EITHER IN CONTRACT, TORT OR OTHERWISE, FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, EXEMPLARY OR PUNITIVE DAMAGES OR ANY DAMAGES ASSOCIATED WITH ANY LOST PROFITS OR LOST OPPORTUNITIES OF SUCH OTHER PERSON (INCLUDING LOSS OF FUTURE REVENUE, INCOME OR PROFITS, DIMINUTION OF VALUE OR LOSS OF BUSINESS REPUTATION) RELATING TO THE BREACH OR ALLEGED BREACH HEREOF, WHETHER OR NOT THE POSSIBILITY OF SUCH DAMAGES HAS BEEN DISCLOSED TO THE OTHER PARTY IN ADVANCE OR COULD HAVE BEEN REASONABLY FORESEEN BY SUCH OTHER PARTY.

ARTICLE XI

MISCELLANEOUS

11.1 Notices . Any notice, request, demand, waiver, consent, approval or other communication which is required or permitted hereunder shall be in writing and shall be deemed given (a) on the date established by the sender as having been delivered personally, (b) on the date delivered by a private courier as established by the sender by evidence obtained from the courier, (c) on the date sent by facsimile, with confirmation of transmission, if sent during normal business hours of the recipient, if not, then on the next Business Day, or (d) on the fifth day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications, to be valid, must be addressed as follows:

If to Buyer, to:

_______________

Attn:

Facsimile:

With a required copy to:

_______________

Attn:

Facsimile:

If to Seller, to:

_______________

Attn:

Facsimile:

With a required copy to:

_______________

Attn:

Facsimile:

or to such other address or to the attention of such Person or Persons as the recipient party has specified by prior written notice to the sending party (or in the case of counsel, to such other readily ascertainable business address as such counsel may hereafter maintain). If more than one method for sending notice as set forth above is used, the earliest notice date established as set forth above shall control.

11.2 Amendments and Waivers .

(a) Any provision of this Asset Purchase Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Asset Purchase Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective.

(b) No failure or delay by any party in exercising any right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

by a party shall be applicable except in the specific instance for which it was given and (ii) no notice to or demand on one party shall be deemed to be a waiver of any obligation of such party or the right of the party giving such notice or demand to take further action without notice or demand.

11.3 Expenses . Each party shall bear its own costs and expenses in connection with this Asset Purchase Agreement, the Ancillary Agreements and the transactions contemplated hereby and thereby, including all legal, accounting, financial advisory, consulting and all other fees and expenses of third parties, whether or not the transactions contemplated by this Asset Purchase Agreement are consummated.

11.4 Successors and Assigns . This Asset Purchase Agreement may not be assigned by either party hereto without the prior written consent of the other party; provided that , without such consent, Buyer may transfer or assign this Asset Purchase Agreement, in whole or in part or from time to time, to one or more of its Affiliates, but no such transfer or assignment will relieve Buyer of its obligations hereunder. Subject to the foregoing, all of the terms and provisions of this Asset Purchase Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective executors, heirs, personal representatives, successors and assigns.

11.5 Governing Law . This Asset Purchase Agreement and Schedules hereto shall be governed by and interpreted and enforced in accordance with the Laws of the State of California, without giving effect to any choice of Law or conflict of Laws rules or provisions (whether of the State of California or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of California.

11.6 Consent to Jurisdiction . Each party irrevocably submits to the exclusive jurisdiction of (a) the United States District Court for Northern District of California and (b) the State of California, County of Santa Clara, for the purposes of any Action arising out of this Asset Purchase Agreement or any transaction contemplated hereby. Each party agrees to commence any such Action either in the courts of the United States District Court for Northern District of California or if such Action may not be brought in such court for jurisdictional reasons, in the courts of the State of California, County of Santa Clara. Each party further agrees that service of any process, summons, notice or document by U.S. registered mail to such party’s respective address set forth above shall be effective service of process for any Action in any such court with respect to any matters to which it has submitted to jurisdiction in this Section 11.6. Each party irrevocably and unconditionally waives any objection to the laying of venue of any Action arising out of this Asset Purchase Agreement or the transactions contemplated hereby in (i) the United States District Court for Northern District of California, or (ii) the State of California, County of Santa Clara, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such Action brought in any such court has been brought in an inconvenient forum. EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS ASSET PURCHASE AGREEMENT AND THE ANCILLARY AGREEMENTS OR THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF AND THEREOF.

11.7 Counterparts . This Asset Purchase Agreement may be executed in any number of

counterparts, and any party hereto may execute any such counterpart, each of which when executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument. This Asset Purchase Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other party hereto. The parties agree that the delivery of this Asset Purchase Agreement, and the delivery of the Ancillary Agreements and any other agreements and documents at the Closing, may be effected by means of an exchange of facsimile signatures with original copies to follow by mail or courier service.

11.8 Third Party Beneficiaries . No provision of this Asset Purchase Agreement is intended to confer upon any Person other than the parties hereto any rights or remedies hereunder; except that in the case of Article X hereof, the other Indemnitees and their respective heirs, executors, administrators, legal representatives, successors and assigns, are intended third party beneficiaries of such sections and shall have the right to enforce such sections in their own names.

11.9 Entire Agreement . This Asset Purchase Agreement, the Ancillary Agreements, the Schedules and the other documents, instruments and agreements specifically referred to herein or therein or delivered pursuant hereto or thereto set forth the entire understanding of the parties hereto with respect to the transactions contemplated by this Asset Purchase Agreement. All Schedules referred to herein are intended to be and hereby are specifically made a part of this Asset Purchase Agreement. Any and all previous agreements and understandings between or among the parties regarding the subject matter hereof, whether written or oral, are superseded by this Asset Purchase Agreement, except for the Confidentiality Agreement which shall continue in full force and effect in accordance with its terms.

11.10 Captions . All captions contained in this Asset Purchase Agreement are for convenience of reference only, do not form a part of this Asset Purchase Agreement and shall not affect in any way the meaning or interpretation of this Asset Purchase Agreement.

11.11 Severability . Any provision of this Asset Purchase Agreement which is invalid or unenforceable in any jurisdiction shall be ineffective to the extent of such invalidity or unenforceability without invalidating or rendering unenforceable the remaining provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

11.12 Specific Performance . Buyer and Seller agree that (i) money damages would not adequately compensate a party for any failure to perform any obligations set forth in this Asset Purchase Agreement, (ii) the terms of this Asset Purchase Agreement shall be specifically enforceable and (iii) in any action to specifically enforce the terms hereof, any Person against whom such action or proceeding is brought hereby waives the claim or defense that such party has an adequate remedy at law and shall not offer in any such action or proceeding the claim or defense that such remedy at law exists.

11.13 Interpretation .

(a) The meaning assigned to each term defined herein shall be equally applicable to both the singular and the plural forms of such term and vice versa, and words denoting either gender shall include both genders as the context requires. Where a word or

phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning.

(b) The terms “hereof”, “herein” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Asset Purchase Agreement as a whole and not to any particular provision of this Asset Purchase Agreement.

(c) When a reference is made in this Asset Purchase Agreement to an Article, Section, paragraph, Exhibit or Schedule, such reference is to an Article, Section, paragraph, Exhibit or Schedule to this Asset Purchase Agreement unless otherwise specified.

(d) The word “include”, “includes”, and “including” when used in this Asset Purchase Agreement shall be deemed to be followed by the words “without limitation”, unless otherwise specified.

(e) A reference to any party to this Asset Purchase Agreement or any other agreement or document shall include such party’s predecessors, successors and permitted assigns.

(f) Reference to any Law means such Law as amended, modified, codified, replaced or reenacted, and all rules and regulations promulgated thereunder.

(g) The parties have participated jointly in the negotiation and drafting of this Asset Purchase Agreement and the Ancillary Agreements. Any rule of construction or interpretation otherwise requiring this Asset Purchase Agreement or the Ancillary Agreements to be construed or interpreted against any party by virtue of the authorship of this Asset Purchase Agreement or the Ancillary Agreements shall not apply to the construction and interpretation hereof and thereof.

(h) All accounting terms used and not defined herein shall have the respective meanings given to them under GAAP.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase Agreement to be duly executed by their respective authorized officers as of the date first above written.

[BUYER]

By:

Name:

Title:

[SELLER]

By:

Name:

Title:

[PARENT]

By:

Name:

Title:

EXHIBIT B

DRAFT DISCLOSURE SCHEDULE

Exhibit 10.23

SHARE PURCHASE AGREEMENT

dated as of November 30, 2010

among

ALPHA AND OMEGA SEMICONDUCTOR LIMITED,

THE PARTIES SET FORTH ON SCHEDULE A,

MIN JUANG AS REPRESENTATIVE,

and

AGAPE PACKAGE MANUFACTURING LTD.

relating to the purchase and sale

of the Common Shares of

AGAPE PACKAGE MANUFACTURING LTD.

TABLE OF CONTENTS

		Page
ARTICLE I	DEFINITIONS	1
1.1	Definitions	1
1.2	Construction	6

ARTICLE II	PURCHASE AND SALE OF THE SHARES	6
2.1	Purchase and Sale of the Shares	6
2.2	Closing	6
2.3	Transactions to be Effected at the Closing	7

ARTICLE III	REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS	7
3.1	Organization	8
3.2	Authority and Enforceability	8
3.3	No Conflicts; Consents	8
3.4	The Shares	9

ARTICLE IV	REPRESENTATIONS AND WARRANTIES OF THE BUYER	9
4.1	Organization and Good Standing	9
4.2	Authority and Enforceability	9
4.3	No Conflicts; Consents	10
4.4	No Other Representations and Warranties by the Company or the Shareholders	10

ARTICLE V	COVENANTS	10
5.1	Restrictions on Share Transfers	13
5.2	Conduct of Business	13
5.3	Access to Information; Notification	15
5.4	Confidentiality	15
5.5	Public Announcements	16
5.6	Employee Matters	16
5.7	Payment of Taxes and Fees	17
5.8	Transaction Expenses	17
5.9	Further Assurances	17
5.10	Termination of Shareholder Rights	17
5.11	Release	15
5.12	Representative	15
5.13	Preservation of Records	16
5.14	D&O Indemnification and Exculpation	16
5.15	Employee Benefits	17

ARTICLE VI	CONDITIONS TO CLOSING	17

TABLE OF CONTENTS (continued)

6.1	Conditions to Obligations of the Buyer and the Shareholders	17
6.2	Conditions to Obligations of the Buyer	17
6.3	Conditions to Obligations of the Shareholders	18

ARTICLE VII	TERMINATION	19
7.1	Termination	19
7.2	Effect of Termination	20

ARTICLE VIII	INDEMNIFICATION	20
8.1	Survival	20
8.2	Indemnification by the Shareholders	20
8.3	Indemnification by Buyer	21
8.4	Exclusive Remedy	22
8.5	Knowledge; Company Breaches	22

ARTICLE IX	MISCELLANEOUS	22
9.1	Notices	22
9.2	Amendments and Waivers	24
9.3	Expenses	24
9.4	Assignment and Delegation	24
9.5	Successors and Assigns	25
9.6	Governing Law	25
9.7	Arbitration	25
9.8	Counterparts	26
9.9	Third Party Beneficiaries	26
9.10	Entire Agreement	26
9.11	Captions	26
9.12	Disclosure Schedule	27
9.13	Severability	27
9.14	Specific Performance	27
9.15	Interpretation	27

SHARE PURCHASE AGREEMENT

SHARE PURCHASE AGREEMENT, dated as of November 30, 2010 (the “ Agreement ”), among Alpha and Omega Semiconductor Limited, a Bermuda exempted company (the “ Buyer ”), the parties set forth on Schedule A hereto (the “ Shareholders ”), Min Juang as Representative and Agape Package Manufacturing Ltd., a Cayman Islands exempt company (the “ Company ”).

WITNESSETH

WHEREAS, the Shareholders collectively own 6,032,500 shares (the “ Shares ”) of the issued and outstanding common shares, with a par value of $0.001 per share (the “ Common Shares ”), of the Company;

WHEREAS, each Shareholder is the record and beneficial owner of the number of Shares set forth opposite each such Shareholder’s name on Schedule A hereto under the heading “Number of Shares Owned”;

WHEREAS, the Shareholders desire to sell all of the Shares to the Buyer, and the Buyer desires to purchase all of the Shares from the Shareholders, upon the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, the owners of issued and outstanding Preferred Shares of the Company also desire to sell the Preferred Shares to the Buyer pursuant to a separate Share Purchase Agreement, dated on the same date hereof (the “ Preferred Share Purchase Agreement ”).

NOW, THEREFORE, in consideration of the foregoing premises and the respective representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

Article I
DEFINITIONS

1.1 Definitions . Except as otherwise explicitly provided herein, when used in this Agreement, the following terms shall have the meanings assigned to them in this Section 1.1 , or in the applicable Section of this Agreement to which reference is made in this Section 1.1 .

“ Acquired Company ” means the Company and each of its Subsidiaries.

“ Action ” means any action, suit, proceeding, claim, arbitration, litigation or investigation.

“ Affiliate ” means, with respect to any specified Person, any other Person directly or indirectly Controlling, Controlled by or under common Control with such specified Person.

“ Agreement ” shall have the meaning set forth in the Preamble.

“ Benefit Plan ” means any Plan, existing at the Closing Date or prior thereto, established, sponsored or to which contributions have at any time been made by any Acquired Company, or any predecessor of any of the foregoing, or under which any employee, former employee, director or independent contractor of any Acquired Company is covered, is eligible for coverage, has benefit rights, or for which any Acquired Company is a party, is subject to or may have Liabilities.

“ Books and Records ” means minutes books, share books, share ledgers, books of account, manuals, general, financial, warranty and shipping records, invoices, members, customer and supplier lists, correspondence, engineering, maintenance and operating records, advertising and promotional materials, credit records of customers and other documents, records and files, in each case related to the business of the Acquired Companies, including books and records relating to, and tangible embodiments of, the Acquired Company’s intellectual property.

“ Business Day ” means a day other than a Saturday, Sunday or other day on which banks located in San Francisco, California or Cayman Islands are authorized or required by Law to close.

“ Buyer ” shall have the meaning set forth in the Preamble.

“ Buyer Deductible ” shall have the meaning set forth in Section 8.2(c) .

“ Buyer Indemnitees ” shall have the meaning set forth in Section 8.2(a) .

“ Buyer’s Disclosure Schedule” means the disclosure schedule dated and delivered as of the date hereof by the Buyer to the Representative, which is attached to this Agreement.

“ Buyer Warrant Losses ” shall have the meaning set forth in Section 8.2(c) .

“ Centre ” shall have the meaning set forth in Section 9.7(b) .

“ Closing ” shall have the meaning set forth in Section 2.2 .

“ Closing Date ” shall have the meaning set forth in Section 2.2 .

“ Common Shares ” shall have the meaning set forth in the Recitals.

“ Company ” shall have the meaning set forth in the Preamble.

“ Company Share Options ” means options to purchase Common Shares issued pursuant to the Company Share Plan.

“ Company Share Plan ” means 2004 Share Plan adopted by the Company, as amended from time to time.

“ Continuing Employees ” shall have the meaning set forth in Section 5.15 .

“ Contract ” means any agreement, contract, license, lease, commitment, arrangement or

understanding, written or oral, including any invoice, sales order or purchase order.

“ Control ” means, when used with respect to any Person, the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by Contract or otherwise and the terms “ Controlling ” and “ Controlled ” shall have meanings correlative to the foregoing.

“ D&O Indemnitees ” shall have the meaning set forth in Section 5.14 .

“ Effective Time ” shall have the meaning set forth in Section 2.2 .

“ Eligible Employees ” shall have the meaning set forth in Section 5.6(c) .

“ Equity Incentive Amount ” shall have the meaning set forth in Section 5.6(a) .

“ GAAP ” means United States generally accepted accounting principles.

“ Governmental Entity ” means any entity or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to United States federal, state, local or municipal government, foreign, international, multinational or other government, including any department, commission, board, agency, bureau, subdivision, instrumentality, official or other regulatory, administrative or judicial authority thereof, and any arbitrator, including any authority or other quasi- governmental entity established by a Governmental Entity to perform any of such functions, and any non-governmental regulatory body to the extent that the rules and regulations or orders of such body have the force of Law.

“ Indebtedness ” means any of the following: (a) any indebtedness, whether or not contingent, for borrowed money; (b) any obligations evidenced by bonds, debentures, notes or other similar instruments; (c) any obligations to pay the deferred purchase price of property or services; (d) any obligations as lessee under leases that have been, or should be, recorded as capitalized leases under GAAP; (e) any indebtedness created or arising under any conditional sale or other title retention agreement with respect to acquired property; (f) any obligations, contingent or otherwise, under or with respect to acceptance credit, letters of credit or similar facilities; (g) any obligation with respect to interest rate and currency cap, collar, hedging or swap Contracts; (h) any obligation secured by a Lien; (i) a guarantee of the obligations of any other Person; (j) any guaranty of any of the foregoing; (k) any accrued interest, fees and charges in respect of any of the foregoing and (l) any prepayment premiums and penalties, and any other fees, expenses, indemnities and other amounts payable as a result of the prepayment or discharge of any of the foregoing.

“ Inventory ” means all raw materials, supplies, parts, work in process and finished goods inventory.

“ Law ” means any statute, law (including common law), constitution, treaty, charter, ordinance, code, Order, rule, regulation and any other binding requirement or determination of any Governmental Entity.

“ Liabilities ” means any direct or indirect liabilities, obligations, expenses, Indebtedness, claims, losses, damages, deficiencies, guarantees, endorsements or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, due or to become due, liquidated or unliquidated, matured or unmatured or otherwise, including any unpaid Taxes and associated obligations thereof such as filing or disclosure requirements under the applicable Tax Law.

“ Lien ” means, with respect to any property or asset (including the Shares), any lien (statutory or otherwise), mortgage, pledge, charge, security interest, hypothecation, community property interest, equitable interest, servitude, option, right (including rights of first refusal), restriction (including restrictions on voting, transfer or other attribute of ownership), lease, license, other rights of occupancy, adverse claim, reversion, reverter, preferential arrangement or any other encumbrance in respect of such property or asset.

“ Losses ” means any loss, Liabilities, damage, injury, claim, demand, settlement, judgment, award, fine, penalty, fee (including reasonable attorneys’ fees), charge, cost or expense of any nature; provided , however , that “Losses” shall not include any special, punitive, exemplary, speculative, indirect, remote or consequential damages, diminutions of value or damages for lost profits.

“ Material Adverse Effect ” means a material adverse effect on the business, assets, operations, financial condition or results of operations of the Acquired Companies, taken as a whole, excluding any effect to the extent arising out of (i) changes in the global economies or securities or financial markets, (ii) changes that generally affect the industry in which the Company or any of its Subsidiaries operates, (iii) changes arising in connection with hostilities, acts of war, sabotage or terrorism or military actions, (iv) any action taken by the Buyer or its Affiliates with respect to transactions contemplated hereby, (v) changes in applicable Laws or accounting rules (including GAAP), (vi) the failure of the Acquired Companies to meet any of their internal projections or forecasts, (vii) hurricanes, earthquakes, fires, floods or other acts of God, or (viii) the public announcement of this Agreement or the transactions contemplated hereby.

“ Notice ” shall have the meaning set forth in Section 9.1 .

“ Order ” means any award, injunction, judgment, decree, order, ruling, subpoena or verdict or other decision issued, promulgated or entered by or with any Governmental Entity.

“ Organizational Documents ” means, with respect to any entity, the certificate of incorporation or formation, the articles of incorporation, by-laws, articles of organization, partnership agreement, limited liability company agreement, formation agreement, joint venture agreement or other similar organizational documents of such entity (in each case, as amended).

“ Permit ” means any authorization, approval, consent, certificate, declaration, filing, notification, qualification, registration, license, permit or franchise or any waiver of any of the foregoing, of or from, or to be filed with or delivered to, any Governmental Entity or pursuant to any Law.

“ Person ” means an individual, a corporation, a partnership, a limited liability company, a trust, an unincorporated association.

“ Plan ” means any bonus, incentive compensation, deferred compensation, pension, profit sharing, retirement, share purchase, share option, share ownership, share appreciation rights, restricted share, phantom share, share or cash award, deferred compensation, leave of absence, layoff, stay, vacation, day or dependent care, legal services, cafeteria, life, health, welfare, post-retirement, accident, disability, worker’s compensation or other insurance, severance, separation, change of control, employment or other employee benefit plan, practice, policy, agreement or arrangement of any kind, whether written or oral, or whether for the benefit of a single individual or more than one individual.

“ PRC Section 698 ” means the Notice of the State Administration of Taxation on Strengthening the Management of Enterprise Income Tax Collection of Proceeds from Equity Transfers by Non-resident Enterprises, Guoshuihan [2009] No. 698.

“ Preferred Shares ” means the preferred shares of the Company, with a par value of $0.001 per share.

“ Preferred Share Purchase Agreement ” shall have the meaning set forth in the Recitals.

“ Released Party ” shall have the meaning set forth in Section 5.11 .

“ Representative ” shall have the meaning set forth in Section 5.12(a) .

“ Shares ” shall have the meaning set forth in the Recitals.

“ Shareholder Agreements ” shall have the meaning set forth in Section 5.10 .

“ Shareholder Deductible ” shall have the meaning set forth in Section 8.3(c) .

“ Shareholder Indemnitees ” shall have the meaning set forth in Section 8.3 .

“ Shareholders ” shall have the meaning set forth in the Preamble.

“ Shareholders’ Disclosure Schedule ” means the disclosure schedule dated and delivered as of the date hereof by the Representative to the Buyer, which is attached to this Agreement.

“ Shareholder Warrant Losses ” shall have the meaning set forth in the Section 8.3(c) .

“ Subsidiary ” or “ Subsidiaries ” means, with respect to any Person, any other Person that is directly or indirectly Controlled by the first Person.

alternative or add-on minimum, environmental, profits, windfall profits, transaction, license, lease, service, service use, occupation, severance, energy, Transfer Taxes, unemployment, social security, workers’ compensation, capital, premium, and other taxes, assessments, customs, duties, fees, levies, or other governmental charges of any nature whatever, whether disputed or not, together with any interest, penalties, additions to tax, or additional amounts with respect thereto.

“ Taxing Authority ” means any Governmental Entity having jurisdiction with respect to any Tax, including the state and local tax bureaus of the People’s Republic of China.

“ Transfer Taxes ” means sales, use, transfer, real property transfer, recording, documentary, stamp, registration and share transfer taxes and fees.

“ $ ” means United States dollars.

1.2 Construction . For the purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires (a) the meaning assigned to each term defined herein shall be equally applicable to both the singular and the plural forms of such term and vice versa, and words denoting any gender shall include all genders as the context requires; (b) where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning; (c) the terms “hereof”, “herein”, “hereunder”, “hereby” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement; (d) when a reference is made in this Agreement to an Article, Section, paragraph, Exhibit or Schedule, such reference is to an Article, Section, paragraph, Exhibit or Schedule of this Agreement unless otherwise specified; (e) the words “include”, “includes” and “including” when used in this Agreement shall be deemed to be modified by the words “without limitation”, unless otherwise specified; (f) the use of the word “or” is not intended to be exclusive unless expressly indicated otherwise; (g) the word “shall” shall be construed to have the same meaning and effect of the word “will”; (h) a reference to any party to this Agreement or any other agreement or document shall include such party’s predecessors, successors and permitted assigns; (i) a reference to any Law means such Law as amended, modified, codified, replaced or reenacted, from time to time, and all rules and regulations promulgated thereunder and (j) all accounting terms used and not defined herein have the respective meanings given to them under GAAP.

Article II
PURCHASE AND SALE OF THE SHARES

transferred, $0.52 in cash, without interest.

2.2 Closing . The consummation of the transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Morgan, Lewis & Bockius LLP, 2 Palo Alto Square, 3000 El Camino Real, Suite 700, Palo Alto, California, 94306, at 10:00 a.m. on a date to be specified by the parties which shall be no later than two (2) Business Days after satisfaction (or waiver as provided herein) of the conditions set forth in Article VI (other than those conditions that by their nature will be satisfied at the Closing), unless another time, date and/or place is agreed to in writing by the Buyer and the Representative. The date upon which the Closing occurs is herein referred to as the “ Closing Date .” The Closing will be deemed effective as of 3:00 p.m. PST on the Closing Date (the “ Effective Time ”).

2.3 Transactions to be Effected at the Closing .

(a) At the Closing, the Buyer will:

(i) pay to each Shareholder by transfer of immediately available funds in accordance with the instructions provided by such Shareholder and amount equal to (A) $0.52 multiplied by (B) the number of Shares set forth opposite such Shareholder’s name on Schedule A hereto under the heading “Number of Shares Owned”; and

(ii) deliver to the Representative all other documents, instruments or certificates reasonably required to be delivered by the Buyer at or prior to the Closing pursuant to this Agreement (including Section 6.3 hereof).

(b) At the Closing, each Shareholder and the Representative, as applicable, will deliver to the Buyer:

(i) a certificate or certificates representing the number of Shares set forth opposite such Shareholder’s name on Schedule A hereto under the heading “Number of Shares Owned,” duly endorsed or accompanied by stock powers duly endorsed in blank and with all required share transfer tax stamps affixed;

(ii) all other documents and instruments necessary to vest in the Buyer all of such Shareholder’s right, title and interest in and to the Shares, free and clear of all Liens, subscriptions, options, warrants, calls, proxies, commitments and Contracts of any kind;

(iii) all copies of the consents, approvals and notices (if any) listed on Section 2.3(b)(iii) of the Shareholders’ Disclosure Schedule obtained or provided, as the case may be, in form and substance reasonably satisfactory to the Buyer; and

(iv) all other documents, instruments or certificates reasonably required to be delivered by such Shareholder at or prior to the Closing pursuant to this Agreement (including Section 6.2 hereof).

Article III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

Each of the Shareholders, severally but not jointly, and solely with respect to such Shareholder, represents and warrants to the Buyer as of the date hereof and as of the Closing Date, as follows:

3.1 Organization . Such Shareholder, if a legal entity, is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or other formation.

3.2 Authority and Enforceability . Such Shareholder has the requisite power and authority, and, in the case of any Shareholder that is an individual, the requisite legal capacity, to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by such Shareholder of this Agreement and the consummation by such Shareholder of the transactions contemplated hereby have been duly authorized by all necessary action on the part of such Shareholder and no other action is necessary on the part of such Shareholder to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by such Shareholder. Assuming due authorization, execution and delivery by the Buyer and each other party thereto, this Agreement constitutes a legal, valid and binding obligation of such Shareholder, enforceable against such Shareholder in accordance with its terms, except as limited by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Laws relating to creditors’ rights generally and (b) general principles of equity, whether such enforceability is considered in a proceeding in equity or at Law.

3.3 No Conflicts; Consents .

(a) Except as set forth on Section 3.3(a) of the Shareholders’ Disclosure Schedule , the execution and delivery by such Shareholder of this Agreement does not, the performance by such Shareholder of its obligations hereunder and the consummation of the transactions contemplated hereby (in each case, with or without the giving of notice or lapse of time or both) will not, directly or indirectly, (i) if such Shareholder is a legal entity, violate or conflict with or result in the breach of the provisions of any of the Organizational Documents of such Shareholder, (ii) violate, breach, conflict with or constitute a default, an event of default, or an event creating any additional rights (including rights of amendment, impairment, modification, suspension, revocation, acceleration, termination, or cancellation), impose additional obligations or result in a loss of any rights, or require a consent or the delivery of notice, under any Contract, Law or Permit to which such Shareholder is a party or a beneficiary or to which such Shareholder or its Shares is subject, or (iii) result in the creation of any Liens, subscriptions, options, warrants, calls, proxies, commitments or Contracts of any kind upon any of the Shares, except in the case of clause (ii) where such violation, breach, conflict, default, event or other item (taken as a whole) would not reasonably be expected to materially impair or delay the ability of such Shareholder to perform its obligations under this Agreement. There is no Action pending or, to the knowledge of such Shareholder, threatened against or affecting the ability of such Shareholder to enter into the transactions contemplated by this Agreement.

(b) Except as set forth on Section 3.3(b) of the Shareholders’ Disclosure Schedule , no Permit or Order of, with, or to any Governmental Entity is required by such Shareholder in connection with the execution and delivery, of this Agreement, the performance of the obligations hereunder and the consummation of the transactions contemplated hereby, except where the failure to obtain such Permit or Order would not reasonably be expected to materially impair or delay the ability of such Shareholder to perform its obligations under this Agreement.

3.4 The Shares .

(a) Other than the Shareholder Agreements, such Shareholder holds of record and owns beneficially all of the Shares set forth opposite such Shareholder’s name on Schedule A hereto under the heading “Number of Shares Owned”, free and clear of all Liens, subscriptions, options, warrants, calls, proxies, commitments, restrictions and Contracts of any kind. The number of Shares set forth opposite such Shareholder’s name on Schedule A hereto under the heading “Number of Shares Owned” correctly sets forth all of the capital stock of the Company owned of record or beneficially by such Shareholder and such Shareholder does not own (or have any rights in or to acquire) any capital stock of the Company or any other securities convertible into, or exercisable or exchangeable for, capital stock of the Company. Such Shareholder’s Shares were not issued in violation of (i) any Contract to which such Shareholder is or was a party or beneficiary or by which such Shareholder or its properties or assets is or was subject or (ii) of any preemptive or similar rights of any Person. This Agreement, together with the other documents executed and delivered at Closing by such Shareholder, will be effective to transfer valid title to such Shareholder’s Shares to the Buyer, free and clear of all Liens, subscriptions, options, warrants, calls, proxies, commitments and Contracts of any kind.

(b) Other than the Shareholder Agreements, such Shareholder is not party to (i) any voting agreement, voting trust, registration rights agreement, shareholder agreement or other similar arrangement with respect to the capital stock of the Company or (ii) any Contract obligating such Shareholder to vote or dispose of any shares of the capital stock of, or other equity or voting interests in, the Company or which has the effect of restricting or limiting the transfer, voting or other rights associated with the Shares.

Article IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER

The Buyer represents and warrants to the Shareholders and the Company as of the date hereof and as of the Closing Date.

4.1 Organization and Good Standing . The Buyer is duly organized, validly existing and in good standing under the Laws of Bermuda.

been duly authorized by all necessary action on the part of the Buyer and no other action is necessary on the part of the Buyer to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Buyer. Assuming due authorization, execution and delivery by the Shareholders and each other party thereto, this Agreement constitutes the valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms, except as limited by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Laws relating to creditors’ rights generally and (b) general principles of equity, whether such enforceability is considered in a proceeding in equity or at Law.

4.3 No Conflicts; Consents .

(a) Except as set forth on Section 4.3 of the Buyer’s Disclosure Schedule , the execution and delivery by the Buyer of this Agreement does not, and the performance by the Buyer of its obligations hereunder and the consummation of the transactions contemplated hereby (in each case, with or without the giving of notice or lapse of time, or both) will not, directly or indirectly, (i) violate or conflict with the provisions of any of the Organizational Documents of the Buyer or (ii) violate, breach, conflict with or constitute a default, an event of default, or an event creating any additional rights (including rights of amendment, impairment, suspension, revocation, acceleration, termination or cancellation), impose additional obligations or resulting in a loss of any rights or require a consent or the delivery of notice, under any Contract, Law or Permit applicable to the Buyer or to which the Buyer is a party or a beneficiary or to which the Buyer or its assets are subject, except in the case of clause (ii) where such violation, breach, conflict, default, event or other item (taken as a whole) would not reasonably be expected to materially impair or delay the ability of the Buyer to perform its obligation under this Agreement. As of the date hereof, there is no Action pending or, to the knowledge of the Buyer, threatened against or affecting the ability of the Buyer to enter into the transactions contemplated in this Agreement.

(b) Except as set forth on Section 4.3(b) of the Buyer’s Disclosure Schedule , no Permit or Order of, with, or to any Governmental Entity is required by the Buyer in connection with the execution and delivery of this Agreement, the performance of the obligations hereunder and the consummation of the transactions contemplated hereby, except where the failure to obtain such Permit or Order would not reasonably be expected to materially impair or delay the ability of the Buyer to perform its obligations under this Agreement.

4.4 No Other Representations and Warranties by the Company or the Shareholders . The Buyer hereby acknowledges that none of the Company, the Shareholders, their respective directors, officers, Affiliates or representatives have made any representations or warranties, express or implied, of any nature whatsoever relating to the Acquired Companies or the business of the Acquired Companies or otherwise in connection with the transactions contemplated hereby, other than those representations and warranties expressly set forth in Article III .

Article V
COVENANTS

5.1 Restrictions on Share Transfers . Each Shareholder hereby agrees not to transfer, assign or pledge, directly or indirectly, by operation of law or otherwise, any of his, her or its Shares (other than the sale of such Shares pursuant to this Agreement) during the period from the date hereof through and including the earlier of (a) the Closing and (b) date of termination of this Agreement in accordance with its terms. Any such attempted transfer, assignment or pledge during such period will not be effective and the Shareholders shall cause the Company not to record such transfer, assignment or pledge in the share and option transfer records of the Company.

5.2 Conduct of Business .

(a) Except (i) as set forth in this Agreement or on Section 5.2 of the Shareholders’ Disclosure Schedule , (ii) as required by applicable Law, or (iii) with the prior written consent of the Buyer (which consent shall not be unreasonably withheld, conditioned or delayed), during the period commencing on the date hereof and ending at the earlier of the Closing Date and the termination of this Agreement in accordance with its terms, the Company shall, and shall cause its Subsidiaries to, carry on their business in the ordinary course in a manner consistent with past practice, to pay their debts and Taxes when due, not to shorten or lengthen the customary payment cycles for any of their payables of receivables and, to the extent consistent therewith, to use their commercially reasonable efforts to keep intact their businesses, keep available the services of their current employees and preserve their relationships with customers, suppliers, licensors, licensees, distributors and other Persons with which they have significant business relationships. The Company shall promptly forward to Buyer complete and accurate copies of all material notices received or sent by any Acquired Company under any material Contract.

(b) Without limiting the generality of Section 5.2(a) , except (A) as set forth in this Agreement or on Section 5.2(b) of the Shareholders’ Disclosure Schedule , (B) as required by applicable Law, or (C) with the prior written consent of the Buyer (which consent shall not be unreasonably withheld, conditioned or delayed), during the period commencing on the date hereof and ending at the earlier of the Closing Date and the termination of this Agreement in accordance with its terms, the Company will not, and will cause its Subsidiaries not to, take any action or enter into any transaction that would result in any of the following:

(i) any amendment to or change in the Organization Documents of any Acquired Company;

(ii) other than pursuant to the exercise of Company Share Options outstanding as of the date hereof, any issuance, sale or other disposition or repurchase, redemption or other acquisition of any shares of, or rights of any kind to acquire (including options) any shares of, any capital stock or other equity interests of any Acquired Company;

(iii) any declaration, setting aside or payment of any dividend or other

distribution (whether in cash, stock or property, or any combination thereof) with respect to any capital stock of any Acquired Company (other than any direct or indirect wholly-owned Subsidiary of the Company);

(iv) any reclassification, combination, splitting, subdivision or issuance of any other securities in respect of, in lieu of or in substitution for, directly or indirectly, any of the capital stock or other equity interests of any Acquired Company or any options or other rights to acquire any of the foregoing;

(v) any change in its accounting principles or practices or the methods by which such principles or practices are applied for financial reporting purposes (except as required by GAAP);

(vi) (A) entry into or amendment or modification to an employment, consulting, severance, change in control or similar Contract, other than with respect to hiring and firing in the ordinary course of business, (B) increase in the rate of compensation (including bonus opportunities) or benefits (including severance) of any employee, officer, director, consultant or independent contractor of any Acquired Company, other than the bonus payments to the Eligible Employees as contemplated by Section 5.6(c) , (C) grant of any severance or termination pay unless required by the express terms of any Benefit Plan, or (D) any action that would constitute a “mass lay-off,” a “mass termination,” or a “plant closing,” or which would otherwise trigger notice requirements under any applicable Law concerning reductions in force;

(vii) (A) except in the ordinary course of business consistent with past practice, any cancellation, material modification, termination or grant of a material waiver or release of any Permit, Contract or other right or claim or give any consent or exercise any material right thereunder or (B) entry into any Contract which would be material to the Acquired Companies (taken as a whole) or outside the ordinary course of business;

(viii) any acquisition, sale, transfer, conveyance, lease or other disposition of any businesses or any properties or assets of any Person that are material, individually or in the aggregate, that have a fair market value in excess of $100,000 by any Acquired Company (other than acquisitions of supplies and sales of Inventory in the ordinary course of business consistent with past practice);

(ix) (A) any incurrence, guarantee, or assumption by any Acquired Company of any Indebtedness, or mortgage, pledge or grant of a Lien on any of their properties or assets in excess of $100,000 in the aggregate for the Acquired Companies (taken as a whole), (B) fail to pay any creditor any amount owed to such creditor when due, or (C) except as specifically contemplated by this Agreement, any payment of any principal of or interest on any Indebtedness before the required date of such payment, cancellation of any Indebtedness or waiver of any claims or rights with respect to any Indebtedness;

(x) any complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of any Acquired Company;

(xi) any change in any method of accounting, accounting principle or

accounting practice by any Acquired Company or any making of, or any change in, any Tax election, any change in any tax accounting method or any settlement of any claim for Taxes;

(xii) any action that materially violates any provision of this Agreement; or

(xiii) any authorization or entry into any Contract to do, any of the foregoing.

5.3 Access to Information; Notification .

(a) The Company shall (and shall cause its Subsidiaries to) afford to the Buyer and its officers, directors, employees, accountants, counsel, consultants, advisors, agents and other representatives reasonable access at all reasonable times to the offices, properties, facilities, Books and Records of the Acquired Companies and the officers, directors, employees, accountants, counsel, consultants, advisors, agents and other representatives of the Acquired Companies to discuss the business, financial condition or prospects of the Acquired Companies, provided that such access does not unreasonably disrupt the normal operations of the applicable Acquired Company and shall comply with all applicable Laws.

(b) Each Shareholder and the Company shall (and the Company shall cause its Subsidiaries to) provide the Buyer with prompt written notice (i) in the event of the happening of (or such Shareholder or any Acquired Company becoming aware of) any fact, event, or occurrence (taken together with all other facts, events and occurrences) which does, or would reasonably be expected to, have a Material Adverse Effect, or cause a material breach of, or a material inaccuracy in, any of the representations and warranties of such Shareholder set forth in Article III of this Agreement if such fact, event or occurrence existed on the date hereof or material breach of any of such Shareholder’s covenants or any of the Company’s covenants set forth herein, (ii) of any written notice from any Person alleging that the consent of such Person is or could be required in connection with the transactions contemplated by this Agreement and (iii) of any written notice from any Governmental Entity in connection with the transactions contemplated by this Agreement.

5.4 Confidentiality . For the twenty-four (24) months period after the Closing, each Shareholder shall, and shall cause its Affiliates to, hold, and shall use its commercially reasonable efforts to cause its and their respective officers, directors, employees, accountants, counsel, consultants, advisors, agents and other representatives to hold, in confidence any and all information, whether written or oral, concerning the Acquired Companies, except to the extent that such Person can show that such information (a) is in the public domain through no fault of such Shareholder or any of its Affiliates or (b) is lawfully acquired by them after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If such Shareholder or any of its Affiliates are compelled to disclose any such information by judicial or administrative process or by other requirements of Law, such Person shall promptly notify the Buyer in writing and shall disclose only that portion of such information which such Person is advised by its counsel in writing is legally required to be disclosed, provided that such Person shall exercise its commercially reasonable efforts to obtain

an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information. Without prejudice to the rights and remedies otherwise available in this Agreement, the parties each acknowledge that money damages would not be an adequate remedy for any breach of this Section 5.4 , and that the Buyer will be entitled to specific performance and other equitable relief by way of injunction in respect of a breach or threatened breach of any this Section 5.4 .

5.5 Public Announcements . None of the Buyer, the Company, the Shareholders or any of their respective representatives or Affiliates shall issue any press release or make any public statement relating to the subject matter of this Agreement without the prior written approval of the other parties hereto, except that any party may make any public disclosure required by applicable Law or pursuant to any listing agreement with any national securities exchange or stock market (in which case the party required to make the disclosure shall, where legally permissible, consult with the other parties and allow the other parties reasonable time to comment thereon prior to issuance or release). The parties shall consult with each other concerning the means by which the Acquired Companies’ employees, customers and suppliers and others having dealings with the Acquired Companies will be informed of the subject matter of this Agreement, and Buyer will have the right to be present for any such communication.

5.6 Employee Matters .

(a) Prior to the Closing, the Board of Directors of the Company (or, if appropriate, any committee thereof administering the Company Share Plan) shall adopt such resolutions and take such other actions (including adopting any plan amendments), if any, as are required to provide that, effective at the Effective Time: (i) each then outstanding Company Share Option granted under the Company Share Plan shall immediately vest in full and become exercisable for all of the Common Shares at the time subject to such option as fully-vested Common Shares; and (ii) each then-outstanding Company Share Option as so fully vested and exercisable shall be cancelled immediately and automatically in exchange for payment of an amount in cash equal to the product of (A) the number of Common Shares subject to such Company Share Option, and (B) the excess, if any, of $0.52 over the per share exercise price of such Company Share Option. All such cash payments to be paid pursuant to the immediately preceding clauses (ii) shall be referred to herein as the “ Equity Incentive Amounts ”. Any Equity Incentive Amounts shall be paid by the Company promptly following the Closing through the payroll of the Company, but in no event later than twenty (20) Business Days after the Closing. For purposes of clarity, no payment shall be made with respect to any Company Share Option so cancelled with a per-share exercise price that equals or exceeds $0.52.

(b) Within twenty (20) Business Days after the Closing, the Company shall pay or cause to be paid to each holder of Company Share Options granted under the Company Share Plan any Equity Incentive Amounts to which such holder is entitled as determined in accordance with Section 5.6(a) through the Company’s payroll less any Taxes which the Company must withhold or is liable to pay to any Tax authority.

(c) Prior to the Closing, the Company shall grant, effective as of the Effective Time, a cash bonus to each employee who holds Common Shares or Company Share Options

upon the execution of this Agreement and who continues to be employees of the Company on the Closing Date (the “ Eligible Employees ”), an amount of $0.13 for each Common Share or each Common Share subject to the Company Share Option held by such employee. The foregoing cash bonus shall be declared upon the execution hereof and paid immediately following the Closing through the payroll of the Company, but in no event later than twenty (20) Business Days after the Closing.

5.7 Payment of Taxes and Fees . Each Shareholder shall pay all Taxes arising out of or in connection with the transactions effected pursuant to this Agreement, which are imposed on such Shareholder in accordance with applicable Tax Law by a duly empowered Taxing Authority. Each Shareholder shall file all necessary documentation and Tax Returns with respect to such Taxes.

5.8 Transaction Expenses . Subject to Section 9.3 hereof, prior to the Closing, the Company shall, and shall cause its Subsidiaries to, pay any and all costs, fees or expenses incurred, owed or payable by the Acquired Companies in connection with the transactions contemplated by this Agreement, including any cost, fees or expenses for which the Acquired Companies have not yet been invoiced.

5.9 Further Assurances . Except as otherwise provided herein, the Buyer, the Company and each Shareholder shall use their respective commercially reasonable efforts to take, or cause to be taken, all actions necessary or appropriate to consummate and make effective the transactions contemplated by this Agreement. If at any time (whether before or after the Closing) any further action is necessary or appropriate to carry out the purposes of this Agreement, the parties shall use their commercially reasonable efforts to take, or cause to be taken, that action.

5.10 Termination of Shareholder Rights . Effective upon the Closing, without any further action on the part of any party, the Amended and Restated Series A Preferred Shares Subscription and Warrant Agreement, the Amended and Restated Investors’ Rights Agreement, the Amended and Restated Right of First Refusal Agreement and the Amended and Restated Voting Agreement, each dated as of October 21, 2004 (collectively, the “ Shareholder Agreements ”), shall be terminated automatically. Each of the Shareholders and the Company hereby waives each provision of any of the Shareholder Agreements that is or, with or without notice or lapse of time or both, would be in conflict with or violated by the execution, delivery or performance by such Shareholder or the Company of this Agreement (including the notice requirement pursuant to Sections 2 and 3, respectively, of the Amended and Restated Co-Sale and Right of First Refusal Agreement, dated as of October 21, 2004).

or obligations that arise from or are related to this Agreement and the transactions contemplated hereby), and each Shareholder agrees that he, she or it will not seek to recover any amounts solely in connection therewith or thereunder from any Acquired Company, the Buyer or any of their respective Affiliates or representatives; provided , however, nothing contained herein shall release any Released Party from any Liabilities or claims arising from or in connection with any fraud, bad faith, knowing actions or criminal violations by such Released Party.

5.12 Representative .

(a) Each Shareholder irrevocably appoints Min Juang (the “ Representative ”) with power of designation and assignment as its true and lawful attorney-in-fact and agent with full power of substitution, to act solely and exclusively on behalf of, and in the name of, such Shareholder with the full power, without the consent of such Shareholder, to exercise as the Representative in its sole discretion deems appropriate, the powers which such Shareholder could exercise under the provisions of this Agreement and to take all actions necessary or appropriate in the judgment of the Representative in connection with this Agreement, which shall include the power and authority to amend, modify, waive or provide consent with respect to, any provision of this Agreement and to execute, deliver and accept such waivers and consents and any and all notices, documents, certificates or other papers to be delivered in connection with this Agreement and the consummation of the transactions contemplated hereby as the Representative, in its sole discretion, may deem necessary or desirable; provided that the Representative may not amend this Agreement without the consent of such Shareholder if the consideration to be received by such Shareholder pursuant to Article II hereof will be reduced by the proposed amendment or if such Shareholder will be disproportionately and adversely affected by the proposed amendment relative to the other Shareholders of the same class. The Representative shall have the power to waive, on behalf of each Shareholder, any attorney-client privileges in connection with communications between such Shareholder and counsel to the Acquired Companies in connection with the transactions contemplated hereunder. The Buyer and the Buyer Indemnitees, if applicable, will be entitled to rely exclusively upon any notices and other acts of the Representative as being legally binding acts of each Shareholder individually and the Shareholders collectively. The appointment and power of attorney granted by each Shareholder to the Representative shall be deemed coupled with an interest and all authority conferred hereby shall be irrevocable whether by death or incapacity of any such Shareholder or the occurrence of any other event or events.

(b) Each Shareholder acknowledges and agrees that the Representative will not be liable to such Shareholder for any act done or omitted hereunder as the Representative while acting in good faith and in the exercise of reasonable judgment, and any act done or omitted pursuant to the advice of counsel will be conclusive evidence of such good faith. The Shareholders will jointly and severally indemnify the Representative and hold it harmless against any Losses incurred without gross negligence or bad faith on the part of the Representative and arising out of or in connection with the acceptance or administration of its duties under this Agreement.

share, of any out-of-pocket, independent, third-party fees and expenses (including fees and expenses of counsel, accountants and other advisors) incurred by the Representative that arise out of or are in connection with the acceptance or administration of the Representative’s duties under this Agreement.

5.13 Preservation of Records . After the Closing, the Buyer agrees, and agrees to cause the Acquired Companies to act in such a manner, to preserve and keep the records held by it relating to the business of the Acquired Companies for a period of six (6) years from the Closing Date, and shall make such records and applicable personnel reasonably available to the Shareholders as may be reasonably required in connection with, among other things, any insurance claims, legal proceedings or Tax audits or governmental investigations by or against the Shareholders or any of their Affiliates or to enable the Shareholders to comply with their respective obligations under this Agreement.

5.14 D&O Indemnification and Exculpation . The Buyer, from and after the Closing Date, shall cause the Organizational Documents of the Company to contain provisions no less favorable to the individuals who on or prior to the Closing Date were directors, officers or employees of any of the Acquired Companies (“ D&O Indemnitees ”) with respect to indemnification and limitation of certain Liabilities of such D&O Indemnitees relating to matters arising on or prior to the Closing Date than are set forth in the Articles of Association of the Company as of the date of this Agreement.

5.15 Employee Benefits . With respect to the employees of the Acquired Companies immediately prior to the Closing and who continue their employment with the Company or any of its Subsidiaries, as applicable (the “ Continuing Employees ”), after the Closing the Buyer agrees to cause the Acquired Companies to (i) for a period of at least twelve (12) months, maintain the same wage rates or base salary for such Continuing Employees as in effect immediately prior to the Closing, (ii) pay bonuses to such Continuing Employees for the calendar year 2010 in accordance with the bonus policy of the Company in effect immediately prior to the Closing ( provided that nothing in this Section 5.15 shall prevent the Buyer from changing such bonus policy or implementing a new bonus policy for the calendar year 2011 and thereafter), and (iii) credit periods of service prior to the Closing Date for purposes of determining eligibility, vesting and benefit entitlement under all compensation and benefit plans, programs and policies maintained by the Acquired Companies after the Closing. Notwithstanding anything contained herein to the contrary, nothing in this Section 5.15 shall prevent the Buyer from terminating the employment of any such Continuing Employee.

Article VI
CONDITIONS TO CLOSING

6.1 Conditions to Obligations of the Buyer and the Shareholders . The obligations of the Buyer and the Shareholders to consummate the transactions contemplated by this Agreement are subject to the satisfaction of the following conditions:

(a) No temporary restraining Order, preliminary or permanent injunction or other Order and no Action shall be in effect or have been instituted or threatened enjoining,

prohibiting or otherwise preventing, or seeking to enjoin, prohibit or otherwise prevent the consummation of the transactions contemplated by this Agreement.

(b) No Law shall have been enacted or shall be deemed applicable to the transactions contemplated by this Agreement which makes the consummation of such transactions illegal.

(c) The transactions contemplated by the Perferred Share Purchase Agreement shall have consummated simultaneously with the transactions contemplated by this Agreement.

6.2 Conditions to Obligations of the Buyer . The obligation of the Buyer to consummate the transactions contemplated by this Agreement is subject to the satisfaction (or waiver in writing by the Buyer in its sole discretion) of the following further conditions:

(a) Each of the representations and warranties made by the Shareholders in this Agreement that is qualified by materiality shall be true and correct when made and as of the Closing as if made at and as of the Closing and each such representation and warranty that is not so qualified shall be true and correct in all material respects when made and as of the Closing as if made at and as of the Closing, except to the extent that such representations and warranties refer specifically to an earlier date, in which case such representations and warranties shall have been true and correct as of such earlier date.

(b) The Shareholders and the Company shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with at or prior to the Closing.

(d) The Buyer shall have received certificates dated the Closing Date signed by (i) a duly authorized representative of each of Min Juang and Leeshawn Luo (in each case, on behalf of such Shareholder individually and not in a representative capacity on behalf of all the Shareholders or any group thereof or any Acquired Company) to the effect that the conditions set forth in Sections 6.2(a) and 6.2(b) (only with respect to obligations and covenants of such Shareholder) have been satisfied, and (ii) an officer of the Company to the effect that conditions set forth in Sections 6.2(b) (only with respect to obligations and covenants of the Company) and 6.2(c) have been satisfied.

(e) The consents, approvals and copies of the notices (if any) listed on Section 6.2(e) of the Shareholders’ Disclosure Schedule shall have been obtained or provided in form and substance reasonably satisfactory to the Buyer and each such consent, approval or notice (i) shall not be subject to the satisfaction of any condition that has not been satisfied or waived and (ii) shall be in full force and effect.

(f) The Shareholders and the Company shall have executed and delivered (or caused to be executed and delivered) to the Buyer all agreements and other documents required

to be executed and delivered to the Buyer pursuant to this Agreement at or prior to the Closing (including share certificates for the Shares and all other certificates, documents and instruments required to be delivered to the Buyer at the Closing pursuant to Section 2.3(b) ).

6.3 Conditions to Obligations of the Shareholders . The obligation of the Shareholders to consummate the transactions contemplated by this Agreement is subject to the satisfaction (or waiver in writing by the Representative in its sole discretion) of the following further conditions:

(a) Each of the representations and warranties made by the Buyer in this Agreement that is qualified by materiality shall be true and correct when made and as of the Closing as if made at and as of the Closing and each such representation and warranty that is not so qualified shall be true and correct in all material respects when made and as of the Closing as if made at and as of the Closing, except to the extent that such representations and warranties refer specifically to an earlier date, in which case such representations and warranties shall have been true and correct as of such earlier date.

(b) The Buyer shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with at or prior to the Closing Date.

(c) No event should have occurred that has had, or would reasonably be expected to have, a material adverse effect on the business, assets, operations, financial condition or results of operations of the Buyer and its Subsidiaries, taken as a whole.

(d) The Shareholders shall have received a certificate dated the Closing Date signed on behalf of the Buyer by an officer of the Buyer to the effect that the conditions set forth in Sections 6.3(a) , 6.3(b) and 6.3(c) have been satisfied.

(e) The Buyer shall have executed and delivered to the Shareholders all agreements and other documents required to be executed and delivered to the Shareholders pursuant to this Agreement at or prior to the Closing (including all certificates, documents and instruments required to be delivered to the Shareholders the Closing pursuant to Section 2.3(a) ) and the Buyer shall have made the payments required to be made by the Buyer at the Closing pursuant to Sections 2.3(a)(i) .

Article VII
TERMINATION

7.1 Termination .

(a) This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing:

(i) by mutual written consent of the Buyer and the Representative;

(ii) by the Buyer or the Representative if the Closing does not occur on or before December 6, 2010; provided that the right to terminate this Agreement under this

clause (ii) shall not be available to any party whose breach of a representation, warranty, covenant or agreement under this Agreement has been the cause of, or resulted in the failure of, the Closing to occur on or before such date;

(iii) by the Buyer if (A) the Shareholders or the Company shall have breached any of the covenants or agreements contained in this Agreement to be complied with by the Shareholders or the Company, as applicable, such that the closing condition set forth in Section 6.2(b) would not be satisfied, (B) there exists a breach of any representation or warranty of the Shareholders contained in this Agreement such that the closing condition set forth in Section 6.2(a) would not be satisfied or (C) following the date hereof an event has occurred that has had, or would reasonably be expected to have, a Material Adverse Effect; provided , (1) in the case of clause (A) and (B) of this Section 7.1(a)(iii) , that such breach is not cured by the Shareholders or the Company, as applicable, within ten (10) Business Days after the Shareholders or the Company, as applicable, receives written notice of such breach from the Buyer and (2) the Buyer shall not be entitled to terminate this Agreement pursuant to clause (A) or (B) of this Section 7.1(a)(iii) if, at the time of such termination the Buyer is in breach of any representation, warranty, covenant or other agreement contained herein in a manner that the conditions to Closing set forth in Section 6.3(a) or Section 6.3(b) , as applicable, would not be satisfied;

(iv) by the Representative if (A) the Buyer shall have breached any of the covenants or agreements contained in this Agreement to be complied with by the Buyer such that the closing condition set forth in Section 6.3(b) would not be satisfied or (B) there exists a breach of any representation or warranty of the Buyer contained in this Agreement such that the closing condition set forth in Section 6.3(a) would not be satisfied or (C) following the date hereof an event has occurred that has had, or would reasonably be expected to have, a material adverse effect on the business, assets, operations, financial condition or results of operations of the Buyer and its Subsidiaries, taken as a whole; provided , (1) in the case of clause (A) and (B) of this Section 7.1(a)(iv) , that such breach is not cured by the Buyer within ten (10) Business Days after the Buyer receives written notice of such breach from the Representative and (2) the Representative shall not be entitled to terminate this Agreement pursuant to clause (A) or (B) of this Section 7.1(a)(iv) , if, at the time of such termination the Shareholders or the Company is in breach of any representation, warranty, covenant or other agreement contained herein in a manner that the conditions to Closing set forth in Section 6.2(a) or Section 6.2(b) , as applicable, would not be satisfied;

(v) by the Buyer or the Representative if a Governmental Entity shall have issued an Order or taken any other Action, in any case having the effect of restraining, enjoining or otherwise prohibiting, or attempting to restrain, enjoin or otherwise prohibit, the transactions contemplated by this Agreement and such Order or other Action is final and non-appealable.

(b) The party desiring to terminate this Agreement pursuant to Sections 7.1(a)(ii) , 7.1(a)(iii) , 7.1(a)(iv) , or 7.1(a)(v) shall give written notice of such termination to the other parties hereto.

Article VIII
INDEMNIFICATION

8.1 Survival .

(a) Except as otherwise expressly provided in this Agreement, the representations and warranties of the Shareholders and the Buyer contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing, and shall in no way be affected by an investigation or knowledge of the subject matter thereof made by or on behalf of the Buyer or the Shareholders.

8.2 Indemnification by the Shareholders .

(a) Subject to the limitations set forth herein, each Shareholder shall, severally but not jointly, indemnify and defend the Buyer and its Affiliates (including, after the Closing, each Acquired Company) and their respective shareholders, members, managers, officers, directors, employees, agents, successors and assigns (the “ Buyer Indemnitees ”) against, and shall hold them harmless from, any and all Losses resulting from, arising out of, or incurred by any Buyer Indemnitee in connection with, or otherwise with respect to (i) any inaccuracy or breach of any representation or warranty made by such Shareholder in this Agreement or any certificate or other document furnished or to be furnished to Buyer in connection with the transactions contemplated by this Agreement (without regard and without giving effect to any “materiality” or similar qualification contained in any such representation or warranty); (ii) any breach by such Shareholder or the Company of any covenant or agreement contained in this Agreement (without regard and without giving effect to any “materiality” or similar qualification contained in any such covenant or agreement); or (iii) any Losses arising under PRC Section 698 that are attributable to such Shareholder.

(b) The aggregate Liability for indemnification of each Shareholder under this Section 8.2 shall be limited to the amount of net proceeds received by such Shareholder pursuant to Section 2.1 hereof.

(c) The Buyer Indemnitees shall not be entitled to indemnification for any Loss or Losses pursuant to Section 8.2(a)(i) (the “ Buyer Warranty Losses ”) unless and until the aggregate amount of all Buyer Warranty Losses incurred by the Buyer Indemnitees exceeds one percent (1%) of the aggregate purchase price paid pursuant to this Agreement upon the Closing (the “ Buyer Deductible ”) and then only to the extent that the Buyer Warranty Losses exceed the Buyer Deductible, provided that the limitations set forth in this Section 8.2(c) shall not apply to any Loss or Losses based on any breach of the covenants or agreements set forth in Section 5.7

or any Loss or Losses arising under PRC Section 698.

8.3 Indemnification by Buyer .

(a) The Buyer shall indemnify and defend the Shareholders, their Affiliates and their respective shareholders, members, managers, officers, directors, employees, agents, successors and assigns (the “ Shareholder Indemnitees ”) against, and shall hold them harmless from, any and all Losses resulting from, arising out of, or incurred by any Shareholder Indemnitee in connection with, or otherwise with respect to (i) any inaccuracy or breach of any representation or warranty made by the Buyer in this Agreement or any certificate or other document furnished or to be furnished to the Company or the Shareholders in connection with the transactions contemplated by this Agreement (without regard and without giving effect to any “materiality” or similar qualification contained in any such representation or warranty); or (ii) any breach by the Buyer of any covenant or agreement contained in this Agreement (without regard and without giving effect to any “materiality” or similar qualification contained in any such covenant or agreement).

(b) The aggregate Liability for indemnification of the Buyer to each Shareholder under this Section 8.3 shall be limited to the amount of net proceeds received by such Shareholder pursuant to Section 2.1 hereof.

(c) The Shareholder Indemnitees shall not be entitled to indemnification for any Loss or Losses pursuant to Section 8.3(a)(i) (the “ Shareholder Warranty Losses ”) unless and until the aggregate amount of all Shareholder Warranty Losses incurred by the Shareholder Indemnitees exceeds one percent (1%) of the aggregate purchase price paid pursuant to this Agreement upon the Closing (the “ Shareholder Deductible ”) and then only to the extent that the Shareholder Warranty Losses exceed the Shareholder Deductible.

8.4 Exclusive Remedy . From and after the Closing, the sole and exclusive remedy (other than injunctive relief) with respect to any breach, inaccuracy or misrepresentation, of any representation or warranty or any covenant or agreement in this Agreement, shall be indemnification pursuant to this Article VIII .

8.5 Knowledge; Company Breaches . No information provided to the Buyer, its Affiliates or their respective representatives (including (x) notices delivered pursuant to Section 5.3(b) and (y) information obtained by the Buyer, its Affiliates and its representatives in connection with the Buyer’s investigation of the Acquired Companies prior to the date hereof) shall modify, diminish or in any other way affect the Buyer’s remedies (including its right to indemnification), or prevent or cure any inaccuracies in, misrepresentations or breaches of representations or warranties, or breaches of covenants made by the Shareholders or the Company in this Agreement or (y) be deemed to amend, modify or supplement the Shareholders’ Disclosure Schedules in this Agreement, or (z) have an effect on the satisfaction of the conditions to the Closing set forth in Article VI . Notwithstanding anything to the contrary herein, in the event that (x) the Company delivers written notices to the Buyer or any of its Affiliates or representatives pursuant to Section 5.3(b) prior to the Closing informing the Buyer of any action or omission that is or would reasonably be expected to result in a breach or default of any of the

Acquired Companies of any of their respective covenants or obligations under this Agreement, and (y) the Buyer shall proceed with the Closing, then, from and after the Closing, none of the Shareholders, their respective Affiliates and each of their respective representatives shall have any Liability solely for any such Acquired Company’s breach or default to the extent disclosed and the Buyer shall be deemed to have waived each such potential claim with prejudice.

Article IX
MISCELLANEOUS

9.1 Notices .

(a) For a notice or other communication (a “ Notice ”) under this Agreement to be valid, it must be in writing and signed by the sending party (including electronic signatures in the case of e-mail Notices), and the sending party must use one of the following methods of delivery: (i) personal delivery; (ii) registered or certified mail, in each case, return receipt requested and postage prepaid; (iii) overnight courier, with all fees prepaid, (iv) facsimile, with confirmation of transmission, or (v) by e-mail to the addresses set forth herein.

(b) For a Notice to be valid, it must be addressed to the receiving party at one or more addresses listed below for the receiving party or to any other address designated by the receiving party in a Notice in accordance with this Section 9.1 .

If to the Representative or any Shareholder:

Min Juang
#B1 Building, Dongkai Industrial Park Songjiang Export Process Zone, Area B

Songjiang, Shanghai, China, 201614
Facsimile No.: +86-21-57856181
E-mail: mjuang@apmcn.com

The party sending the Notice shall also send an informational copy of each Notice to:

O’Melveny & Myers LLP
31st Floor, AIA Central, 1 Connaught Road Central
Hong Kong
Attention: Douglas C. Freeman
Telephone No.: +852 3512-2380
Facsimile No.: +852 2522-1760
E-mail: dfreeman@omm.com


If to the Buyer:	Alpha and Omega Semiconductor Limited

c/o Alpha and Omega Semiconductor Incorporated
475 Oakmead Pkwy

Sunnyvale, CA 94085

Attention: Ephraim Kwok
Facsimile No.: 408-830-9749
E-mail: ekwok@us.aosmd.com

The party sending the Notice shall also send an informational copy of each Notice to:

Morgan, Lewis & Bockius LLP
2 Palo Alto Square
3000 El Camino Real, Suite 700
Palo Alto, CA 94306
Attention: Lucas Chang
Facsimile No.: 650-843-4001
E-mail: lchang@morganlewis.com

(c) Subject to Section 9.1(d) , a valid Notice is effective when received by the receiving party in accordance with Sections 9.1(a) and 9.1(b) . A Notice is deemed to have been received as follows:

(i) If it is delivered in person or sent by registered or certified mail or by overnight courier, upon the earlier of (A) receipt as indicated by the date on the signed receipt or as otherwise established by the sending party and (B) two (2) Business Days after the Business Day on which it is sent to the receiving party. If it is delivered by facsimile or e-mail, on the date the facsimile or e-mail is transmitted with confirmation of transmission.

(ii) If the receiving party rejects or otherwise refuses to accept it, or if it cannot be delivered because of a change in address for which no Notice was given, then upon that rejection, refusal or inability to deliver.

(d) If a Notice is received after 5:00 p.m. PST on a Business Day at the location specified in the address for the receiving party, or on a day that is not a Business Day, then the Notice is deemed received at 9:00 a.m. PST on the next Business Day.

(e) If more than one method for delivery of a Notice under Section 9.1(a) is used, the earliest Notice date under Section 9.1(c) will control.

(f) If a Notice is to be given under this Section 9.1 to a permitted successor or assign of a person or entity, then such Notice shall be given in accordance with this Section 9.1 to such successor or assign.

9.2 Amendments and Waivers . No amendment of this Agreement will be effective unless it is in writing and signed by the Buyer, the Company and the Representative (on behalf of the Shareholders). No waiver of any provision of this Agreement will be effective unless it is in writing and signed by the party granting the waiver, and no such waiver will constitute a waiver of satisfaction of any other provision of this Agreement. To be valid, any document signed by a party in accordance with this Section 9.2 must be signed by a party authorized to do so. No failure or delay by any party in exercising any right or privilege hereunder shall operate as a

waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof of the exercise of any other right, power or privilege.

9.3 Expenses . Except as otherwise provided in this Agreement, each party shall bear its own costs and expenses in connection with this Agreement and the transactions contemplated hereby, including all legal, accounting, financial advisory, consulting and all other fees and expenses of third parties, whether or not the transactions contemplated by this Agreement are consummated; provided that the Shareholders and those shareholders of the Company who desire to sell the Preferred Shares to the Buyer pursuant to the Preferred Share Purchase Agreement shall be responsible for all their pro rata share of costs and expenses incurred by the Acquired Companies in connection with this Agreement and the transactions contemplated hereby in excess of $175,000. For the purpose of clarity, this Section 9.3 and Section 9.3 of the Preferred Share Purchase Agreement encompass the entire agreement of the parties with respect to the share of the Acquired Companies’ costs and expenses. Nothing in this Section 9.3 and Section 9.3 of the Preferred Share Purchase Agreement shall be construed to mean that the Acquired Companies shall be responsible for paying costs and expenses of more than $175,000.

9.4 Assignment and Delegation .

(a) No party may assign any part of its rights, or delegate any of its obligations, under this Agreement, except (i) with the other parties’ prior written consent, and (ii) the Buyer may assign its rights and obligations under this Agreement, in whole or in part, (A) to any of its Affiliates or (B) to any subsequent purchaser of all or substantially all of the assets of the Acquired Companies. No party shall unreasonably withhold its consent to assignment. For purposes of this Section 9.4 , (i) ”assignment” means any assignment, whether voluntary or involuntary, by merger, consolidation, dissolution, operation of law or any other manner, (ii) a “change of control” is deemed an assignment of rights and (iii) ”merger” refers to any merger in which a party participates, regardless of whether it is the surviving or disappearing corporation

(b) Any purported assignment of rights or delegation of obligations in violation of this Section 9.4 is void.

9.5 Successors and Assigns .

(a) If a permitted assignment of rights occurs, the non-assigning party is deemed to have agreed to perform in favor of the assignee.

(b) If a permitted assignment of rights occurs, (i) a contemporaneous delegation is deemed to have occurred, and (ii) the assignee is deemed to have assumed the assignor’s performance obligations in favor of the non-assigning party; except in each case where evidence exists to the contrary.

control” is deemed an assignment of rights, and (iv) ”merger” refers to any merger in which a party participates, regardless of whether it is the surviving or disappearing corporation.

9.6 Governing Law . The Laws of the State of California, without giving effect to principles of conflict of Laws, govern all matters arising out of or relating to this Agreement and all of the transactions it contemplates.

9.7 Arbitration .

(a) Any dispute, controversy or claim arising out of or relating to this Agreement, or the interpretation, breach, termination or validity hereof, shall be resolved through consultation. Such consultation shall begin immediately after one party hereto has delivered to the other party hereto a written request for such consultation. If within thirty (30) days following the date on which such notice is given the dispute cannot be resolved, the dispute shall be submitted to arbitration upon the request of either party with notice to the other.

(b) The arbitration shall be conducted in Hong Kong and administrated by the Hong Kong International Arbitration Centre (the “ Centre ”). There shall be three arbitrators. Each party hereto shall each select one arbitrator within thirty (30) days after giving or receiving the demand for arbitration. The Chairman of the Centre shall select the third arbitrator, who shall be qualified to practice law in the State of California. If either party does not appoint an arbitrator who has consented to participate within thirty (30) days after selection of the first arbitrator, the relevant appointment shall be made by the Chairman of the Centre.

(c) The arbitration proceedings shall be conducted in English. The arbitration tribunal shall apply the UNCITRAL Arbitration Rules as amended in 2010, which rules are deemed to be incorporated by reference into this Section 9.7 . However, if such rules are in conflict with the provisions of this Section 9.7 , including the provisions concerning the appointment of arbitrators, the provisions of this Section 9.7 shall prevail.

(d) The arbitrators shall decide any dispute submitted by the parties to the arbitration strictly in accordance with the substantive law of the State of California and shall not apply any other substantive law.

(e) Each party hereto shall cooperate with the other in making full disclosure of and providing complete access to all information and documents requested by the other in connection with such arbitration proceedings, subject only to any confidentiality obligations binding on such party.

(f) The award of the arbitration tribunal shall be final and binding upon the disputing parties, and either party may apply to a court of competent jurisdiction for enforcement of such award.

(g) Any party to the dispute shall be entitled to seek preliminary injunctive relief, if possible, from any court of competent jurisdiction pending the constitution of the arbitral tribunal.

9.8 Counterparts . The parties may sign this Agreement in several counterparts, each of which will be deemed an original but all of which together will constitute one instrument. The parties agree that delivery of this Agreement may be effected by means of an exchange of facsimile or other electronic copies.

9.9 Third Party Beneficiaries . This Agreement does not and is not intended to confer any rights or remedies upon any Person, including any employee, any beneficiary or dependents thereof, or any collective bargaining representative thereof, other than the parties to this Agreement; provided , however , that in the case of Article VIII , the other Buyer Indemnitees, the other Shareholder Indemnitees and their respective heirs, executors, administrators, legal representatives, successors and assigns, in the case of Section 5.6 , the holders of Company Share Options and Eligible Employees, in the case of Section 5.14 , the D&O Indemnitees, and in the case of Section 5.15 , the Continuing Employees are intended third party beneficiaries of the provisions contained in such Article.

9.10 Entire Agreement . This Agreement, the Exhibits, the Schedules and the other documents, instruments and other agreements specifically referred to in this Agreement or those documents or delivered under this Agreement or those documents constitute the final agreement between the parties. It is the complete and exclusive expression of the parties’ agreement on the subject matter of this Agreement. This Agreement supersedes all prior oral or written agreements or policies relating to this Agreement, except for the Confidentiality Agreement between the Buyer and the Company dated November 16, 2010 which will continue in full force and effect in accordance with its terms. The provisions of this Agreement may not be explained, supplemented, or qualified through evidence of trade usage or a prior course of dealings or performance.

9.11 Captions . All captions contained in this Agreement are for convenience of reference only, do not form a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement.

9.12 Disclosure Schedule . The Shareholders’ Disclosure Schedule has been arranged in sections corresponding to each representation and warranty set forth in Article III . The Buyer’s Disclosure Schedule has been arranged in sections corresponding to each representation and warranty set forth in Article IV . Each exception to a representation and warranty set forth in such Disclosure Schedule shall qualify the specific representations and warranties which are referenced in the applicable section of such Disclosure Schedule, and all other sections of such Disclosure Schedule if it is reasonably evident from the face of such disclosure that such information would be an appropriate disclosure in such other sections. Nothing in the Shareholders’ or Buyer’s Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein, however, unless such Disclosure Schedule identifies the exception with reasonable particularity. The mere listing (or inclusion of a copy) of a document or other item shall not be deemed adequate to disclose an exception to a representation or warranty made herein (unless the representation or warranty has to do with the existence of the document or item itself).

9.13 Severability . If any provision of this Agreement is held invalid, illegal or

unenforceable in any jurisdiction, the remainder of this Agreement, or application of that provision to any Persons or circumstances, or in any jurisdiction, other than those as to which it is held unenforceable, will not be affected by that unenforceability and will be enforceable to the fullest extent permitted by Law.

9.14 Specific Performance . The Buyer, the Company and the Shareholders each agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by them in accordance with the terms hereof and that each party shall be entitled to specific performance of the terms hereof, in addition to any other remedy at Law or equity.

9.15 Interpretation . The parties hereto have participated jointly in the negotiation and drafting of this Agreement, and any rule of construction or interpretation otherwise requiring this Agreement to be construed or interpreted against any party by virtue of the authorship of this Agreement shall not apply to the construction and interpretation hereof.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

BUYER :

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

By: /s/ MIKE F CHANG Name: Mike F. Chang
Title: Chief Executive Officer

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

ACQUIRED COMPANY:

AGAPE PACKAGE MANUFACTURING LTD.

By: /s/ Min Juang

Name: Min Juang
Title: Chief Executive Officer

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

REPRESENTATIVE:

Min Juang

By: /s/ Min Juang

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

Mike Chang

/s/ MIKE F CHANG

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

LEESHAWN LUO

/s/ LEE SHAW LUO

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

YUEH-SE HO

/s/ YUEH-SE HO

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

LUCAS CHANG

/s/ LUCAS CHANG

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

YOSHI YOSHIMOTO

/s/ YOSHI YOSHIMOTO

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

AOI ELECTRONICS CO., LTD.

By: /s/ Min Juang

Name: Min Juang
Title:

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

TENG-TSUN TSAI

/s/ TENG-TSUN TSAI

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

MIN JUANG

/s/ Min Juang

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

CHRISTINE MAK

/s/ Christine Mak

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

LOGOS EVANGELICAL SEMINARY FOUNDATION, INC.

By: /s/ Min Juang

Name: Min Juang
Title:

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

SAN JOSE CHINESE ALLIANCE CHURCH

By: /s/ Min Juang Name: Min Juang
Title:

Schedule A

Shareholders



Name	Number of Shares Owned
Mike Chang	1,200,000
Leeshawn Luo	200,000
Yueh-Se Ho	200,000
Lucas Chang	200,000
Yoshi Yoshimoto	200,000
AOI Electronics Co., Ltd.	500,000
Teng-Tsun Tsai	300,000
Min Juang	200,000
Christine Mak	32,500
Logos Evangelical Seminary Foundation, Inc.	2,000,000
San Jose Chinese Alliance Church	1,000,000

Exhibit 10.24

SHARE PURCHASE AGREEMENT

dated as of November 30, 2010

among

ALPHA AND OMEGA SEMICONDUCTOR LIMITED,

THE PARTIES SET FORTH ON SCHEDULE A,

BEN YANG AS REPRESENTATIVE,

and

AGAPE PACKAGE MANUFACTURING LTD.

relating to the purchase and sale

of the Preferred Shares of

AGAPE PACKAGE MANUFACTURING LTD.

TABLE OF CONTENTS

		Page
ARTICLE I	DEFINITIONS	1
1.1	Definitions	1
1.2	Construction	6

ARTICLE II	PURCHASE AND SALE OF THE SHARES	7
2.1	Purchase and Sale of the Shares	7
2.2	Closing	7
2.3	Transactions to be Effected at the Closing	7

ARTICLE III	REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS	8
3.1	Organization	8
3.2	Authority and Enforceability	8
3.3	No Conflicts; Consents	9
3.4	The Shares	9
3.5	Disclosure of Information and Investmennt Experience	10
3.6	Restricted Securities	10
3.7	Acquisition for Own Account	11
3.8	Status of Shareholder	11

ARTICLE IV	REPRESENTATIONS AND WARRANTIES OF THE BUYER	11
4.1	Organization and Good Standing	11
4.2	Authority and Enforceability	11
4.3	No Conflicts; Consents	11
4.4	Buyer Common Shares	12
4.5	Private Placement	12
4.6	Investment Company Act	12
4.7	Buyer SEC Filings	12
4.8	No Other Representations and Warranties by the Company or the Shareholders	12

ARTICLE V	COVENANTS	13
5.1	Restrictions on Share Transfers	13
5.2	Conduct of Business	13
5.3	Access to Information; Notification	15
5.4	Confidentiality	15
5.5	Public Announcements	16
5.6	Employee Matters	16
5.7	Payment of Taxes and Fees	17
5.8	Transaction Expenses	17
5.9	Further Assurances	17
5.10	Termination of Shareholder Rights	17

TABLE OF CONTENTS (continued)

		Page
5.11	Release	17
5.12	Representative	18
5.13	Rule 144 Matters	19
5.14	Preservation of Records	19
5.15	D&O Indemnification and Exculpation	19
5.16	Employee Benefits	20
5.17	NASDAQ Matters	20

ARTICLE VI	CONDITIONS TO CLOSING	20
6.1	Conditions to Obligations of the Buyer and the Shareholders	20
6.2	Conditions to Obligations of the Buyer	21
6.3	Conditions to Obligations of the Shareholders	21

ARTICLE VII	TERMINATION	22
7.1	Termination	22
7.2	Effect of Termination	24

ARTICLE VIII	INDEMNIFICATION	24
8.1	Survival	24
8.2	Indemnification by the Shareholders	24
8.3	Indemnification by Buyer	25
8.4	Exclusive Remedy	25
8.5	Knowledge; Company Breaches	25

ARTICLE IX	MISCELLANEOUS	26
9.1	Notices	26
9.2	Amendments and Waivers	27
9.3	Expenses	28
9.4	Assignment and Delegation	28
9.5	Successors and Assigns	28
9.6	Governing Law	29
9.7	Arbitration	29
9.8	Counterparts	29
9.9	Third Party Beneficiaries	30
9.10	Entire Agreement	30
9.11	Captions	30
9.12	Disclosure Schedule	30
9.13	Severability	30
9.14	Specific Performance	31
9.15	Interpretation	31

SHARE PURCHASE AGREEMENT

SHARE PURCHASE AGREEMENT, dated as of November 30, 2010 (the “ Agreement ”), among Alpha and Omega Semiconductor Limited, a Bermuda exempted company (the “ Buyer ”), the parties set forth on Schedule A hereto (the “ Shareholders ”), Ben Yang as Representative and Agape Package Manufacturing Ltd., a Cayman Islands exempt company (the “ Company ”).

WITNESSETH

WHEREAS, the Shareholders collectively own 22,300,000 shares (the “ Shares ”) of the issued and outstanding preferred shares, with a par value of $0.001 per share (the “ Preferred Shares ”), of the Company;

WHEREAS, the owners of issued and outstanding Common Shares of the Company also desire to sell the Common Shares to the Buyer pursuant to a separate Share Purchase Agreement, dated on the same date hereof (the “ Common Share Purchase Agreement ”).

ARTICLE I
DEFINITIONS

“ Acquired Company ” means the Company and each of its Subsidiaries.

“ Action ” means any action, suit, proceeding, claim, arbitration, litigation or investigation.

“ Affiliate ” means, with respect to any specified Person, any other Person directly or indirectly Controlling, Controlled by or under common Control with such specified Person.

“ Agreement ” shall have the meaning set forth in the Preamble.

“ Business Day ” means a day other than a Saturday, Sunday or other day on which banks located in San Francisco, California or Cayman Islands are authorized or required by Law to close.

“ Buyer ” shall have the meaning set forth in the Preamble.

“ Buyer Change of Control Event ” shall have the meaning set forth in Section 5.13(c) .

“ Buyer Common Shares ” means the common shares of the Buyer, with a par value of $0.002 per share.

“ Buyer Deductible ” shall have the meaning set forth in Section 8.2(c) .

“ Buyer Indemnitees ” shall have the meaning set forth in Section 8.2(a) .

“ Buyer SEC Filings ” shall have the meaning set forth in Section 4.7 .

“ Buyer’s Disclosure Schedule” means the disclosure schedule dated and delivered as of the date hereof by the Buyer to the Representative, which is attached to this Agreement.

“ Buyer Warrant Losses ” shall have the meaning set forth in Section 8.2(c) .

“ Centre ” shall have the meaning set forth in Section 9.7(b) .

“ Closing ” shall have the meaning set forth in Section 2.2 .

“ Closing Date ” shall have the meaning set forth in Section 2.2 .

“ Common Shares ” means the common shares of the Company, with a par value of $0.001 per share.

“ Common Share Purchase Agreement ” shall have the meaning set forth in the Recitals.

“ Company ” shall have the meaning set forth in the Preamble.

“ Company Share Options ” means options to purchase Common Shares issued pursuant to the Company Share Plan.

“ Company Share Plan ” means 2004 Share Plan adopted by the Company, as amended from time to time.

“ Continuing Employees ” shall have the meaning set forth in Section 5.16 .

“ Contract ” means any agreement, contract, license, lease, commitment, arrangement or understanding, written or oral, including any invoice, sales order or purchase order.

“ D&O Indemnitees ” shall have the meaning set forth in Section 5.15 .

“ Effective Time ” shall have the meaning set forth in Section 2.2 .

“ Eligible Employees ” shall have the meaning set forth in Section 5.6(c) .

“ Equity Incentive Amount ” shall have the meaning set forth in Section 5.6(a) .

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Exchange Shares ” shall have the meaning set forth in Section 2.3(a)(ii) .

“ GAAP ” means United States generally accepted accounting principles.

“ Governmental Entity ” means any entity or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to United States federal, state, local or municipal government, foreign, international, multinational or other government, including any department, commission, board, agency, bureau, subdivision, instrumentality, official or other regulatory, administrative or judicial authority thereof, and any arbitrator, including any authority or other quasi- governmental entity established by a Governmental Entity to perform any of such functions, and any non-governmental regulatory body to the extent that the rules and regulations or orders of such body have the force of Law.

swap Contracts; (h) any obligation secured by a Lien; (i) a guarantee of the obligations of any other Person; (j) any guaranty of any of the foregoing; (k) any accrued interest, fees and charges in respect of any of the foregoing and (l) any prepayment premiums and penalties, and any other fees, expenses, indemnities and other amounts payable as a result of the prepayment or discharge of any of the foregoing.

“ Inventory ” means all raw materials, supplies, parts, work in process and finished goods inventory.

“ Notice ” shall have the meaning set forth in Section 9.1 .

“ Order ” means any award, injunction, judgment, decree, order, ruling, subpoena or verdict or other decision issued, promulgated or entered by or with any Governmental Entity.

“ Person ” means an individual, a corporation, a partnership, a limited liability company, a trust, an unincorporated association.

“ Preferred Shares ” shall have the meaning set forth in the Recitals.

“ Released Party ” shall have the meaning set forth in Section 5.11 .

“ Representative ” shall have the meaning set forth in Section 5.12(a) .

“ Rule 144 ” means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such rule.

“ SEC ” means the Securities and Exchange Commission of the United States or any successor.

“ Securities Act ” shall mean Securities Act of 1933, as amended from time to time.

“ Shares ” shall have the meaning set forth in the Recitals.

“ Shareholder Agreements ” shall have the meaning set forth in Section 5.10 .

“ Shareholder Deductible ” shall have the meaning set forth in Section 8.3(c) .

“ Shareholder Indemnitees ” shall have the meaning set forth in Section 8.3 .

“ Shareholders ” shall have the meaning set forth in the Preamble.

“ Shareholders’ Disclosure Schedule ” means the disclosure schedule dated and delivered as of the date hereof by the Representative to the Buyer, which is attached to this Agreement.

“ Shareholder Warrant Losses ” shall have the meaning set forth in the Section 8.3(c) .

“ Special Shareholder ” means China-Singapore Suzhou Industrial Park Venture Co., Ltd.

“ Special Shareholder Approval ” shall have the meaning set forth in Section 6.1(d) .

“ Subsidiary ” or “ Subsidiaries ” means, with respect to any Person, any other Person that is directly or indirectly Controlled by the first Person.

“ Tax ” or “ Taxes ” means any and all federal, state, local, or foreign net or gross income, gross receipts, net proceeds, sales, use, ad valorem, value added, franchise, bank shares, withholding, payroll, employment, excise, property, abandoned property, escheat, deed, stamp, alternative or add-on minimum, environmental, profits, windfall profits, transaction, license, lease, service, service use, occupation, severance, energy, Transfer Taxes, unemployment, social security, workers’ compensation, capital, premium, and other taxes, assessments, customs, duties, fees, levies, or other governmental charges of any nature whatever, whether disputed or not, together with any interest, penalties, additions to tax, or additional amounts with respect thereto.

“ Taxing Authority ” means any Governmental Entity having jurisdiction with respect to any Tax, including the state and local tax bureaus of the People’s Republic of China.

“ Transfer Taxes ” means sales, use, transfer, real property transfer, recording, documentary, stamp, registration and share transfer taxes and fees.

“ $ ” means United States dollars.

reference is made in this Agreement to an Article, Section, paragraph, Exhibit or Schedule, such reference is to an Article, Section, paragraph, Exhibit or Schedule of this Agreement unless otherwise specified; (e) the words “include”, “includes” and “including” when used in this Agreement shall be deemed to be modified by the words “without limitation”, unless otherwise specified; (f) the use of the word “or” is not intended to be exclusive unless expressly indicated otherwise; (g) the word “shall” shall be construed to have the same meaning and effect of the word “will”; (h) a reference to any party to this Agreement or any other agreement or document shall include such party’s predecessors, successors and permitted assigns; (i) a reference to any Law means such Law as amended, modified, codified, replaced or reenacted, from time to time, and all rules and regulations promulgated thereunder and (j) all accounting terms used and not defined herein have the respective meanings given to them under GAAP.

ARTICLE II

PURCHASE AND SALE OF THE SHARES

2.1 Purchase and Sale of the Shares . Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, each Shareholder will sell, transfer and deliver, and the Buyer will purchase from each Shareholder, on a several, and not joint, basis, all of its respective Shares (free and clear of all Liens, subscriptions, options, warrants, calls, proxies, commitments and Contracts of any kind), and in exchange such Shareholder will receive, for each Share so transferred, at the election of such Shareholder in its sole discretion, either (i) $1.52 in cash, without interest, or (ii) 0.132 fully paid and non-assessable Buyer Common Shares, provided that with respect to each Shareholder, no more than forty percent (40%) of its Shares shall be exchanged for cash pursuant to clause (i) above, as set forth on Schedule A hereto.

2.3 Transactions to be Effected at the Closing .

(a) At the Closing, the Buyer will:

(i) pay to each Shareholder by transfer of immediately available funds in accordance with the instructions provided by such Shareholder and amount equal to (A) $1.52 multiplied by (B) the number of Shares that the Shareholder elects to be exchanged for cash, as set forth opposite such Shareholder’s name on Schedule A hereto under the heading “Number of Shares to be Exchanged for Cash”; and

(ii) issue to each Shareholder a certificate or certificates representing

the number of Buyer Common Shares equal to (A) 0.132 multiplied by (B) the number of Shares that the Shareholder elects to be exchanged for Buyer Common Shares (the “ Exchange Shares ”), as set forth opposite such Shareholder’s name on Schedule A hereto under the heading “Number of Shares to be Exchanged for Buyer Common Shares,” provided that no fractional shares of Buyer Common Shares shall be issued upon the Closing, and in lieu of any fractional shares to which a Shareholder would otherwise be entitled, the Buyer shall pay cash in an amount equal to the product (calculated to the nearest cent) of such fraction and $11.50.

(iii) deliver to the Representative all other documents, instruments or certificates reasonably required to be delivered by the Buyer at or prior to the Closing pursuant to this Agreement (including Section 6.3 hereof).

(b) At the Closing, each Shareholder and the Representative, as applicable, will deliver to the Buyer:

(iv) all other documents, instruments or certificates reasonably required to be delivered by such Shareholder at or prior to the Closing pursuant to this Agreement (including Section 6.2 hereof).

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

Each of the Shareholders, severally but not jointly, and solely with respect to such Shareholder, represents and warrants to the Buyer as of the date hereof and as of the Closing Date, as follows:

3.1 Organization . Such Shareholder, if a legal entity, is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or other formation.

transactions contemplated hereby; provided that with respect to the Special Shareholder only, this representation shall be subject to the receipt of the Special Shareholder Approval. The execution, delivery and performance by such Shareholder of this Agreement and the consummation by such Shareholder of the transactions contemplated hereby have been duly authorized by all necessary action on the part of such Shareholder and no other action is necessary on the part of such Shareholder to authorize this Agreement or to consummate the transactions contemplated hereby; provided that with respect to the Special Shareholder only, this representation shall be subject to the receipt of the Special Shareholder Approval. This Agreement has been duly executed and delivered by such Shareholder. Assuming due authorization, execution and delivery by the Buyer and each other party thereto, this Agreement constitutes a legal, valid and binding obligation of such Shareholder, enforceable against such Shareholder in accordance with its terms, except as limited by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Laws relating to creditors’ rights generally and (b) general principles of equity, whether such enforceability is considered in a proceeding in equity or at Law.

3.3 No Conflicts; Consents .

3.4 The Shares .

3.5 Disclosure of Information and Investment Experience .

(a) Such Shareholder understands that the transactions contemplated by this Agreement involve substantial risk. Such Shareholder (i) is a sophisticated investor with respect to the transactions contemplated by this Agreement, (ii) has adequate information concerning the business and financial affairs of the Acquired Companies to make an informed decision regarding the sale of the Shares pursuant to the terms and conditions of this Agreement, (iii) has independently and without reliance upon the Buyer, and based on such information as such Shareholder has deemed appropriate, made its own analysis and decision to sell the Shares to the Buyer and (iv) has a preexisting business relationship with the Acquired Company of a nature and duration that enables such Shareholder to assess the merits and risks of the transactions contemplated by this Agreement.

(b) The Buyer has not given such Shareholder any investment advice, credit information or opinion on whether the sale of the Shares is prudent.

(c) Notwithstanding anything to the contrary contained herein, such Shareholder acknowledges that (i) the Buyer currently may have, and later may come into possession of, information about the Shares or any Acquired Company that is not known to such Shareholder and that may be material to a decision to sell the Shares; (ii) it has determined to sell the Shares to the Buyer notwithstanding its lack of such knowledge and (iii) the Buyer shall not have any liability to any Shareholder with respect to material information that the Buyer possesses and/or such Shareholder’s lack of such information.

3.6 Restricted Securities . Such Shareholder understands and agrees that the Exchange Shares will be “restricted securities” under applicable securities laws inasmuch as they are being acquired from the Buyer in a transaction not involving a public offering and that under such laws and applicable regulations the Exchange Shares may be resold without registration and/or qualification under the Securities Act only in certain limited circumstances.

3.7 Acquisition for Own Account . Such Shareholder is acquiring the Exchange Shares for investment for its own account, not as a nominee or agent, and not with a view to, or for resale in connection with, any distribution thereof, and such Shareholder has no present intention of selling, granting any participation in, or otherwise distributing the same. Further, such Shareholder is aware of no publication of any advertisement in connection with the transactions contemplated by this Agreement.

3.8 Status of Shareholder . Such Shareholder is either (i) an “accredited investor” within the meaning of Rule 501 of Regulation D, as presently in effect, under the Securities Act, or (ii) not a “U.S. person” as defined in Rule 902 of Regulation S, as presently in effect, under the Securities Act.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER

The Buyer represents and warrants to the Shareholders and the Company as of the date hereof and as of the Closing Date.

4.1 Organization and Good Standing . The Buyer is duly organized, validly existing and in good standing under the Laws of Bermuda.

4.2 Authority and Enforceability . The Buyer has the requisite power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance by the Buyer of this Agreement and the consummation by the Buyer of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Buyer and no other action is necessary on the part of the Buyer to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Buyer. Assuming due authorization, execution and delivery by the Shareholders and each other party thereto, this Agreement constitutes the valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms, except as limited by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Laws relating to creditors’ rights generally and (b) general principles of equity, whether such enforceability is considered in a proceeding in equity or at Law.

4.3 No Conflicts; Consents .

hereby (in each case, with or without the giving of notice or lapse of time, or both) will not, directly or indirectly, (i) violate or conflict with the provisions of any of the Organizational Documents of the Buyer or (ii) violate, breach, conflict with or constitute a default, an event of default, or an event creating any additional rights (including rights of amendment, impairment, suspension, revocation, acceleration, termination or cancellation), impose additional obligations or resulting in a loss of any rights or require a consent or the delivery of notice, under any Contract, Law or Permit applicable to the Buyer or to which the Buyer is a party or a beneficiary or to which the Buyer or its assets are subject, except in the case of clause (ii) where such violation, breach, conflict, default, event or other item (taken as a whole) would not reasonably be expected to materially impair or delay the ability of the Buyer to perform its obligation under this Agreement. As of the date hereof, there is no Action pending or, to the knowledge of the Buyer, threatened against or affecting the ability of the Buyer to enter into the transactions contemplated in this Agreement.

4.4 Buyer Common Shares . All Exchange Shares to be issued in connection with the transactions contemplated in this Agreement have been duly authorized by all necessary corporation action on the part of the Buyer and, upon delivery of the Exchange Shares in accordance with this Agreement, the Exchange Shares will be validly issued, fully paid and non-assessable and free and clear of all Liens other than restrictions imposed by applicable securities laws, and shall not be subject to preemptive or similar rights. The Exchange Shares will be issued in compliance with all applicable federal, state and foreign securities laws.

4.5 Private Placement . Assuming the accuracy of the representations of the Shareholders contained in Article III , no registration under the Securities Act is required for the offer and sale of the Exchange Shares to the Shareholders as contemplated hereby. The issuance and sale of the Exchange Shares hereunder do not contravene the rules and regulations of The NASDAQ Stock Market.

4.6 Investment Company Act . The Buyer is not, is not required to be registered as and is not an Affiliate of, and immediately after the Closing, will not be or be an Affiliate of, an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company,” in each case within the meaning of the Investment Company Act of 1940, as amended.

4.7 Buyer SEC Filings . The Buyer has filed all required forms, reports and documents with the SEC since April 28, 2010 (the “ Buyer SEC Filings ”), each of which has complied in all material respects with all applicable requirements of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder. None of such Buyer SEC Filings, including any financial statements or schedules included or incorporated by reference

therein, contained, when filed, any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

4.8 No Other Representations and Warranties by the Company or the Shareholders . The Buyer hereby acknowledges that none of the Company, the Shareholders, their respective directors, officers, Affiliates or representatives have made any representations or warranties, express or implied, of any nature whatsoever relating to the Acquired Companies or the business of the Acquired Companies or otherwise in connection with the transactions contemplated hereby, other than those representations and warranties expressly set forth in Article III .

ARTICLE V
COVENANTS

5.2 Conduct of Business .

action or enter into any transaction that would result in any of the following:

(i) any amendment to or change in the Organization Documents of any Acquired Company;

(iii) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property, or any combination thereof) with respect to any capital stock of any Acquired Company (other than any direct or indirect wholly-owned Subsidiary of the Company);

(v) any change in its accounting principles or practices or the methods by which such principles or practices are applied for financial reporting purposes (except as required by GAAP);

(ix) (A) any incurrence, guarantee, or assumption by any Acquired

Company of any Indebtedness, or mortgage, pledge or grant of a Lien on any of their properties or assets in excess of $100,000 in the aggregate for the Acquired Companies (taken as a whole), (B) fail to pay any creditor any amount owed to such creditor when due, or (C) except as specifically contemplated by this Agreement, any payment of any principal of or interest on any Indebtedness before the required date of such payment, cancellation of any Indebtedness or waiver of any claims or rights with respect to any Indebtedness;

(x) any complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of any Acquired Company;

(xi) any change in any method of accounting, accounting principle or accounting practice by any Acquired Company or any making of, or any change in, any Tax election, any change in any tax accounting method or any settlement of any claim for Taxes;

(xii) any action that materially violates any provision of this Agreement; or

(xiii) any authorization or entry into any Contract to do, any of the foregoing.

5.3 Access to Information; Notification .

5.4 Confidentiality . For the twenty-four (24) months period after the Closing, each Shareholder shall, and shall cause its Affiliates to, hold, and shall use its commercially

reasonable efforts to cause its and their respective officers, directors, employees, accountants, counsel, consultants, advisors, agents and other representatives to hold, in confidence any and all information, whether written or oral, concerning the Acquired Companies, except to the extent that such Person can show that such information (a) is in the public domain through no fault of such Shareholder or any of its Affiliates or (b) is lawfully acquired by them after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If such Shareholder or any of its Affiliates are compelled to disclose any such information by judicial or administrative process or by other requirements of Law, such Person shall promptly notify the Buyer in writing and shall disclose only that portion of such information which such Person is advised by its counsel in writing is legally required to be disclosed, provided that such Person shall exercise its commercially reasonable efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information. Without prejudice to the rights and remedies otherwise available in this Agreement, the parties each acknowledge that money damages would not be an adequate remedy for any breach of this Section 5.4 , and that the Buyer will be entitled to specific performance and other equitable relief by way of injunction in respect of a breach or threatened breach of any this Section 5.4 .

5.6 Employee Matters .

the payroll of the Company, but in no event later than twenty (20) Business Days after the Closing. For purposes of clarity, no payment shall be made with respect to any Company Share Option so cancelled with a per-share exercise price that equals or exceeds $0.52.

(c) Prior to the Closing, the Company shall grant, effective as of the Effective Time, a cash bonus to each employee who holds Common Shares or Company Share Options upon the execution of this Agreement and who continues to be employees of the Company on the Closing Date (the “ Eligible Employees ”), an amount of $0.13 for each Common Share or each Common Share subject to the Company Share Option held by such employee. The foregoing cash bonus shall be declared upon the execution hereof and paid immediately following the Closing through the payroll of the Company, but in no event later than twenty (20) Business Days after the Closing.

notice or lapse of time or both, would be in conflict with or violated by the execution, delivery or performance by such Shareholder or the Company of this Agreement (including (x) the notice requirement pursuant to Section 2.8 of the Amended and Restated Investors’ Rights Agreement, dated as of October 21, 2004 and (y) if applicable, the notice requirement, the right of first refusal and/or the co-sale right pursuant to Sections 2, 3 and 4, respectively, of the Amended and Restated Co-Sale and Right of First Refusal Agreement, dated as of October 21, 2004).

5.11 Release . Effective upon the Closing, each Shareholder hereby irrevocably waives, releases and discharges the Acquired Companies, the Buyer and each of their respective Affiliates and representatives (each, a “ Released Party ”) of and from any and all Liabilities and obligations to such Shareholder of any kind or nature whatsoever (including in respect of any rights of contribution or indemnification) that are owed by any Acquired Company, arising from any act, omission or event occurring on or prior to the Closing, whether arising under any Contract or otherwise at Law or in equity, and whether or not then known (other than Liabilities or obligations that arise from or are related to this Agreement and the transactions contemplated hereby), and each Shareholder agrees that he, she or it will not seek to recover any amounts solely in connection therewith or thereunder from any Acquired Company, the Buyer or any of their respective Affiliates or representatives; provided , however, nothing contained herein shall release any Released Party from any Liabilities or claims arising from or in connection with any fraud, bad faith, knowing actions or criminal violations by such Released Party.

5.12 Representative .

(a) Each Shareholder irrevocably appoints Ben Yang (the “ Representative ”) with power of designation and assignment as its true and lawful attorney-in-fact and agent with full power of substitution, to act solely and exclusively on behalf of, and in the name of, such Shareholder with the full power, without the consent of such Shareholder, to exercise as the Representative in its sole discretion deems appropriate, the powers which such Shareholder could exercise under the provisions of this Agreement and to take all actions necessary or appropriate in the judgment of the Representative in connection with this Agreement, which shall include the power and authority to amend, modify, waive or provide consent with respect to, any provision of this Agreement and to execute, deliver and accept such waivers and consents and any and all notices, documents, certificates or other papers to be delivered in connection with this Agreement and the consummation of the transactions contemplated hereby as the Representative, in its sole discretion, may deem necessary or desirable; provided that the Representative may not amend this Agreement without the consent of such Shareholder if the consideration to be received by such Shareholder pursuant to Article II hereof will be reduced by the proposed amendment or if such Shareholder will be disproportionately and adversely affected by the proposed amendment relative to the other Shareholders of the same class. The Representative shall have the power to waive, on behalf of each Shareholder, any attorney-client privileges in connection with communications between such Shareholder and counsel to the Acquired Companies in connection with the transactions contemplated hereunder. The Buyer and the Buyer Indemnitees, if applicable, will be entitled to rely exclusively upon any notices and other acts of the Representative as being legally binding acts of each Shareholder individually and the Shareholders collectively. The appointment and power of attorney granted

by each Shareholder to the Representative shall be deemed coupled with an interest and all authority conferred hereby shall be irrevocable whether by death or incapacity of any such Shareholder or the occurrence of any other event or events.

(c) The Shareholders will reimburse the Representative for their pro rata share, of any out-of-pocket, independent, third-party fees and expenses (including fees and expenses of counsel, accountants and other advisors) incurred by the Representative that arise out of or are in connection with the acceptance or administration of the Representative’s duties under this Agreement.

5.13 Rule 144 Matters .

(a) The Buyer agrees that, for one (1) year following the Closing, it will file such reports required to be filed by it under the Securities Act and the Exchange Act and the rules promulgated thereunder and that it will take such further action as required by Rule 144 to the extent required from time to time to enable such Shareholder to sell the Exchange Shares without registration under the Securities Act within the limitation of the exemptions provided by Rule 144.

(b) The Buyer agrees that it will use commercially reasonable efforts to, at its own cost, cause its general counsel or an outside legal counsel acceptable to the transfer agent of the Buyer to issue legal opinions on behalf of any Shareholder as reasonably requested by such Shareholder so that any restrictive legend placed on the certificates of the Exchange Shares held by such Shareholder may be removed in connection with any sale of such Exchange Shares pursuant to Rule 144.

(c) If, during the six (6) months following the Closing, there is (i) a sale or conveyance by the Buyer of all or substantially all of its assets, (ii) an acquisition of the Buyer by another Person by means of merger, consolidation, share sale or another form of corporate reorganization in which the Buyer Common Shares are exchanged for other securities or other consideration, or (iii) any Person becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Buyer representing fifty percent (50%) or more of the total voting power of the Buyer (a “ Buyer Change of Control Event ”), the Buyer agrees to use its commercially reasonable efforts to effect a registration or qualification of the Exchange Shares held by the Shareholders before the consummation of such Buyer Change of Control Event or otherwise ensure such Exchange Shares are not adversely affected relative to other Buyer Common Shares in connection with such Buyer Change of

Control Event.

5.14 Preservation of Records . After the Closing, the Buyer agrees, and agrees to cause the Acquired Companies to act in such a manner, to preserve and keep the records held by it relating to the business of the Acquired Companies for a period of six (6) years from the Closing Date, and shall make such records and applicable personnel reasonably available to the Shareholders as may be reasonably required in connection with, among other things, any insurance claims, legal proceedings or Tax audits or governmental investigations by or against the Shareholders or any of their Affiliates or to enable the Shareholders to comply with their respective obligations under this Agreement.

5.15 D&O Indemnification and Exculpation . The Buyer, from and after the Closing Date, shall cause the Organizational Documents of the Company to contain provisions no less favorable to the individuals who on or prior to the Closing Date were directors, officers or employees of any of the Acquired Companies (“ D&O Indemnitees ”) with respect to indemnification and limitation of certain Liabilities of such D&O Indemnitees relating to matters arising on or prior to the Closing Date than are set forth in the Articles of Association of the Company as of the date of this Agreement.

5.16 Employee Benefits . With respect to the employees of the Acquired Companies immediately prior to the Closing and who continue their employment with the Company or any of its Subsidiaries, as applicable (the “ Continuing Employees ”), after the Closing the Buyer agrees to cause the Acquired Companies to (i) for a period of at least twelve (12) months, maintain the same wage rates or base salary for such Continuing Employees as in effect immediately prior to the Closing, (ii) pay bonuses to such Continuing Employees for the calendar year 2010 in accordance with the bonus policy of the Company in effect immediately prior to the Closing ( provided that nothing in this Section 5.16 shall prevent the Buyer from changing such bonus policy or implementing a new bonus policy for the calendar year 2011 and thereafter), and (iii) credit periods of service prior to the Closing Date for purposes of determining eligibility, vesting and benefit entitlement under all compensation and benefit plans, programs and policies maintained by the Acquired Companies after the Closing. Notwithstanding anything contained herein to the contrary, nothing in this Section 5.16 shall prevent the Buyer from terminating the employment of any such Continuing Employee.

5.17 NASDAQ Matters . The Buyer shall promptly prepare and submit to The NASDAQ Stock Market all reports, applications and other documents and shall take all other actions that may be required to enable all the Exchange Shares to be listed for trading on The NASDAQ Global Market.

ARTICLE VI
CONDITIONS TO CLOSING

(a) No temporary restraining Order, preliminary or permanent injunction or

other Order and no Action shall be in effect or have been instituted or threatened enjoining, prohibiting or otherwise preventing, or seeking to enjoin, prohibit or otherwise prevent the consummation of the transactions contemplated by this Agreement.

(b) No Law shall have been enacted or shall be deemed applicable to the transactions contemplated by this Agreement which makes the consummation of such transactions illegal.

(c) The transactions contemplated by the Common Share Purchase Agreement shall have consummated simultaneously with the transactions contemplated by this Agreement.

(d) Solely with respect to the Special Shareholder, the approval described on Section 6.1(d) of the Shareholders’ Disclosure Schedule (the “ Special Shareholder Approval ”) has been duly received. For the avoidance of doubt, the condition described in this Section 6.1(d) is only for the purchase and sale of the Shares owned by the Special Shareholder, and it has no effect on the purchase and sale of the Shares owned by any other Shareholders.

(a) The aggregate number of the Shares to be purchased upon the Closing pursuant to the terms of this Agreement shall be no less than 5,000,000.

(b) Each of the representations and warranties made by the Shareholders in this Agreement that is qualified by materiality shall be true and correct when made and as of the Closing as if made at and as of the Closing and each such representation and warranty that is not so qualified shall be true and correct in all material respects when made and as of the Closing as if made at and as of the Closing, except to the extent that such representations and warranties refer specifically to an earlier date, in which case such representations and warranties shall have been true and correct as of such earlier date.

(c) The Shareholders and the Company shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with at or prior to the Closing.

(d) No event should have occurred that has had, or would reasonably be expected to have, a Material Adverse Effect.

(e) The Buyer shall have received certificates dated the Closing Date signed by (i) a duly authorized representative of each of AOI Electronics Co., Ltd., Crown Crystal Investments Limited and Nokia Venture Partners II L.P. (in each case, on behalf of such Shareholder individually and not in a representative capacity on behalf of all the Shareholders or any group thereof or any Acquired Company) to the effect that the conditions set forth in Sections 6.2(b) and 6.2(c) (only with respect to obligations and covenants of such Shareholder) have been satisfied, and (ii) an officer of the Company to the effect that conditions set forth in

Sections 6.2(c) (only with respect to obligations and covenants of the Company) and 6.2(d) have been satisfied.

(f) The consents, approvals and copies of the notices (if any) listed on Section 6.2(f) of the Shareholders’ Disclosure Schedule shall have been obtained or provided in form and substance reasonably satisfactory to the Buyer and each such consent, approval or notice (i) shall not be subject to the satisfaction of any condition that has not been satisfied or waived and (ii) shall be in full force and effect.

(g) The Shareholders and the Company shall have executed and delivered (or caused to be executed and delivered) to the Buyer all agreements and other documents required to be executed and delivered to the Buyer pursuant to this Agreement at or prior to the Closing (including share certificates for the Shares and all other certificates, documents and instruments required to be delivered to the Buyer at the Closing pursuant to Section 2.3(b) ).

(b) The Buyer shall have performed or complied in all material respects with all obligations and covenants required by this Agreement to be performed or complied with at or prior to the Closing Date.

(e) The Exchange Shares shall have been authorized for listing on The NASDAQ Global Market, subject to official notice of issuance.

(f) The Buyer shall have executed and delivered to the Shareholders all agreements and other documents required to be executed and delivered to the Shareholders pursuant to this Agreement at or prior to the Closing (including all certificates, documents and instruments required to be delivered to the Shareholders the Closing pursuant to Section 2.3(a) )

and the Buyer shall have made the payments and delivered the share certificates required to be made and delivered by the Buyer at the Closing pursuant to Sections 2.3(a)(i) and 2.3(a)(ii) , respectively.

ARTICLE VII
TERMINATION

7.1 Termination .

(a) This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing:

(i) by mutual written consent of the Buyer and the Representative;

(ii) by the Buyer or the Representative if the Closing does not occur on or before December 6, 2010; provided that the right to terminate this Agreement under this clause (ii) shall not be available to any party whose breach of a representation, warranty, covenant or agreement under this Agreement has been the cause of, or resulted in the failure of, the Closing to occur on or before such date;

(iii) by the Buyer if (A) the Shareholders or the Company shall have breached any of the covenants or agreements contained in this Agreement to be complied with by the Shareholders or the Company, as applicable, such that the closing condition set forth in Section 6.2(c) would not be satisfied, (B) there exists a breach of any representation or warranty of the Shareholders contained in this Agreement such that the closing condition set forth in Section 6.2(b) would not be satisfied or (C) following the date hereof an event has occurred that has had, or would reasonably be expected to have, a Material Adverse Effect; provided , (1) in the case of clause (A) and (B) of this Section 7.1(a)(iii) , that such breach is not cured by the Shareholders or the Company, as applicable, within ten (10) Business Days after the Shareholders or the Company, as applicable, receives written notice of such breach from the Buyer and (2) the Buyer shall not be entitled to terminate this Agreement pursuant to clause (A) or (B) of this Section 7.1(a)(iii) if, at the time of such termination the Buyer is in breach of any representation, warranty, covenant or other agreement contained herein in a manner that the conditions to Closing set forth in Section 6.3(a) or Section 6.3(b) , as applicable, would not be satisfied;

Representative shall not be entitled to terminate this Agreement pursuant to clause (A) or (B) of this Section 7.1(a)(iv) , if, at the time of such termination the Shareholders or the Company is in breach of any representation, warranty, covenant or other agreement contained herein in a manner that the conditions to Closing set forth in Section 6.2(b) or Section 6.2(c) , as applicable, would not be satisfied;

(vi) by the Buyer or the Special Shareholder if the Special Shareholder Approval has not been obtained on or before December 6, 2010; provided that such termination shall be effective solely with respect to the purchase and sale of the Shares owned by the Special Shareholder.

(b) The party desiring to terminate this Agreement pursuant to Sections 7.1(a)(ii) , 7.1(a)(iii) , 7.1(a)(iv) , or 7.1(a)(v) shall give written notice of such termination to the other parties hereto.

7.2 Effect of Termination . In the event of termination of this Agreement in accordance with Section 7.1 , this Agreement will forthwith become void and have no effect, without any Liability (other than with respect to any claim for intentional and bad faith breach of any representation, warranty, covenant or agreement set forth in this Agreement before such termination); provided , that the provisions of Sections 5.4 , 5.5 , 5.8 , 5.12 and 7.2 , Article VIII and Article IX will survive any termination hereof pursuant to Section 7.1 . To the extent the Agreement has been duly terminated pursuant to Section 7.1(a)(vi) , all rights and obligations of the Special Shareholder under this Agreement shall terminate in their entirety with respect to the Special Shareholder as if the Special Shareholder has never been a party to this Agreement.

ARTICLE VIII
INDEMNIFICATION

8.1 Survival .

8.2 Indemnification by the Shareholders .

a) Subject to the limitations set forth herein, each Shareholder shall, severally but not jointly, indemnify and defend the Buyer and its Affiliates (including, after the Closing,

each Acquired Company) and their respective shareholders, members, managers, officers, directors, employees, agents, successors and assigns (the “ Buyer Indemnitees ”) against, and shall hold them harmless from, any and all Losses resulting from, arising out of, or incurred by any Buyer Indemnitee in connection with, or otherwise with respect to (i) any inaccuracy or breach of any representation or warranty made by such Shareholder in this Agreement or any certificate or other document furnished or to be furnished to Buyer in connection with the transactions contemplated by this Agreement (without regard and without giving effect to any “materiality” or similar qualification contained in any such representation or warranty); (ii) any breach by such Shareholder or the Company of any covenant or agreement contained in this Agreement (without regard and without giving effect to any “materiality” or similar qualification contained in any such covenant or agreement); or (iii) any Losses arising under PRC Section 698 that are attributable to such Shareholder.

(b) The aggregate Liability for indemnification of each Shareholder under this Section 8.2 shall be limited to the amount of net proceeds received by such Shareholder pursuant to Section 2.1 hereof ( provided that each Exchange Share received by such Shareholder at the Closing shall be valued at $11.50 per share).

(c) The Buyer Indemnitees shall not be entitled to indemnification for any Loss or Losses pursuant to Section 8.2(a)(i) (the “ Buyer Warranty Losses ”) unless and until the aggregate amount of all Buyer Warranty Losses incurred by the Buyer Indemnitees exceeds one percent (1%) of the aggregate purchase price paid pursuant to this Agreement upon the Closing ( provided that each Exchange Share received at the Closing shall be valued at $11.50 per share) (the “ Buyer Deductible ”) and then only to the extent that the Buyer Warranty Losses exceed the Buyer Deductible, provided that the limitations set forth in this Section 8.2(c) shall not apply to any Loss or Losses based on any breach of the covenants or agreements set forth in Section 5.7 or any Loss or Losses arising under PRC Section 698.

8.3 Indemnification by Buyer .

such Shareholder at the Closing shall be valued at $11.50 per share).

(c) The Shareholder Indemnitees shall not be entitled to indemnification for any Loss or Losses pursuant to Section 8.3(a)(i) (the “ Shareholder Warranty Losses ”) unless and until the aggregate amount of all Shareholder Warranty Losses incurred by the Shareholder Indemnitees exceeds one percent (1%) of the aggregate purchase price paid pursuant to this Agreement upon the Closing ( provided that each Exchange Share received at the Closing shall be valued at $11.50 per share) (the “ Shareholder Deductible ”) and then only to the extent that the Shareholder Warranty Losses exceed the Shareholder Deductible.

ARTICLE IX
MISCELLANEOUS

9.1 Notices .

(b) For a Notice to be valid, it must be addressed to the receiving party at one

or more addresses listed below for the receiving party or to any other address designated by the receiving party in a Notice in accordance with this Section 9.1 .

If to the Representative or any Shareholder:

Ben Yang
38C, # 7, Lane 500, Chang De Lu,

Shanghai, China 200040
Facsimile No.: +86-21-52925822
E-mail: ben@pvp.com.tw

The party sending the Notice shall also send an informational copy of each Notice to:

O’Melveny & Myers LLP
31st Floor, AIA Central, 1 Connaught Road Central
Hong Kong
Attention: Douglas C. Freeman
Telephone No.: +852 3512-2380
Facsimile No.: +852 2522-1760
E-mail: dfreeman@omm.com


If to the Buyer:	Alpha and Omega Semiconductor Limited c/o Alpha and Omega Semiconductor Incorporated

475 Oakmead Pkwy

Sunnyvale, CA 94085

Attention: Ephraim Kwok

Facsimile No.: 408-830-9749

E-mail: ekwok@us.aosmd.com

The party sending the Notice shall also send an informational copy of each Notice to:

Morgan, Lewis & Bockius LLP
2 Palo Alto Square
3000 El Camino Real, Suite 700
Palo Alto, CA 94306
Attention: Lucas Chang
Facsimile No.: 650-843-4001
E-mail: lchang@morganlewis.com

(c) Subject to Section 9.1(d) , a valid Notice is effective when received by the receiving party in accordance with Sections 9.1(a) and 9.1(b) . A Notice is deemed to have been received as follows:

Business Day on which it is sent to the receiving party. If it is delivered by facsimile or e-mail, on the date the facsimile or e-mail is transmitted with confirmation of transmission.

(e) If more than one method for delivery of a Notice under Section 9.1(a) is used, the earliest Notice date under Section 9.1(c) will control.

9.3 Expenses . Except as otherwise provided in this Agreement, each party shall bear its own costs and expenses in connection with this Agreement and the transactions contemplated hereby, including all legal, accounting, financial advisory, consulting and all other fees and expenses of third parties, whether or not the transactions contemplated by this Agreement are consummated; provided that the Shareholders and those shareholders of the Company who desire to sell the Common Shares to the Buyer pursuant to the Common Share Purchase Agreement shall be responsible for all their pro rata share of costs and expenses incurred by the Acquired Companies in connection with this Agreement and the transactions contemplated hereby in excess of $175,000. For the purpose of clarity, this Section 9.3 and Section 9.3 of the Common Share Purchase Agreement encompass the entire agreement of the parties with respect to the share of the Acquired Companies’ costs and expenses. Nothing in this Section 9.3 and Section 9.3 of the Common Share Purchase Agreement shall be construed to mean that the Acquired Companies shall be responsible for paying costs and expenses of more than $175,000.

9.4 Assignment and Delegation .

(a) No party may assign any part of its rights, or delegate any of its obligations, under this Agreement, except (i) with the other parties’ prior written consent, and

(ii) the Buyer may assign its rights and obligations under this Agreement, in whole or in part, (A) to any of its Affiliates or (B) to any subsequent purchaser of all or substantially all of the assets of the Acquired Companies. No party shall unreasonably withhold its consent to assignment. For purposes of this Section 9.4 , (i) ”assignment” means any assignment, whether voluntary or involuntary, by merger, consolidation, dissolution, operation of law or any other manner, (ii) a “change of control” is deemed an assignment of rights and (iii) ”merger” refers to any merger in which a party participates, regardless of whether it is the surviving or disappearing corporation

(b) Any purported assignment of rights or delegation of obligations in violation of this Section 9.4 is void.

9.5 Successors and Assigns .

(a) If a permitted assignment of rights occurs, the non-assigning party is deemed to have agreed to perform in favor of the assignee.

(c) For purposes of this Section 9.5 , (i) ”assignment” means any assignment, whether voluntary or involuntary, by merger, consolidation, dissolution, operation of law or any other manner, (ii) ”assignee” means any successor or assign of the assignor; (iii) a “change of control” is deemed an assignment of rights, and (iv) ”merger” refers to any merger in which a party participates, regardless of whether it is the surviving or disappearing corporation.

9.7 Arbitration .

arbitrator who has consented to participate within thirty (30) days after selection of the first arbitrator, the relevant appointment shall be made by the Chairman of the Centre.

(f) The award of the arbitration tribunal shall be final and binding upon the disputing parties, and either party may apply to a court of competent jurisdiction for enforcement of such award.

(g) Any party to the dispute shall be entitled to seek preliminary injunctive relief, if possible, from any court of competent jurisdiction pending the constitution of the arbitral tribunal.

9.9 Third Party Beneficiaries . This Agreement does not and is not intended to confer any rights or remedies upon any Person, including any employee, any beneficiary or dependents thereof, or any collective bargaining representative thereof, other than the parties to this Agreement; provided , however , that in the case of Article VIII , the other Buyer Indemnitees, the other Shareholder Indemnitees and their respective heirs, executors, administrators, legal representatives, successors and assigns, in the case of Section 5.6 , the holders of Company Share Options and Eligible Employees, in the case of Section 5.15 , the D&O Indemnitees, and in the case of Section 5.16 , the Continuing Employees are intended third party beneficiaries of the provisions contained in such Article.

or policies relating to this Agreement, except for the Confidentiality Agreement between the Buyer and the Company dated November 16, 2010 which will continue in full force and effect in accordance with its terms. The provisions of this Agreement may not be explained, supplemented, or qualified through evidence of trade usage or a prior course of dealings or performance.

9.13 Severability . If any provision of this Agreement is held invalid, illegal or unenforceable in any jurisdiction, the remainder of this Agreement, or application of that provision to any Persons or circumstances, or in any jurisdiction, other than those as to which it is held unenforceable, will not be affected by that unenforceability and will be enforceable to the fullest extent permitted by Law.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

BUYER :

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

By: /s/ MIKE F CHANG

Name: Mike F. Chang
Title: Chief Executive Officer

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

ACQUIRED COMPANY:

AGAPE PACKAGE MANUFACTURING LTD.

By: /s/ Min Juang

Name: Min Juang
Title: Chief Executive Officer

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

REPRESENTATIVE:

BEN YANG

/s/ Ben Yang

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

AOI ELECTRONICS CO., LTD.

By: /s/ Min Juang

Name: Min Juang
Title:

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

BUDWORTH INVESTMENTS LTD.

By: /s/ Min Juang Name: Min Juang
Title:

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

CHENGWEI VENTURES EVERGREEN

FUND L.P.

By: /s/ Min Juang
Name: Min Juang
Title:

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

CMF TECHNOLOGY FUND I LTD.

By: /s/ Min Juang

Name: Min Juang
Title:

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

CHINA-SINGAPORE SUZHOU INDUSTRIAL PARK VENTURE CO., LTD.

By: /s/ Min Juang

Name: Min Juang
Title:

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

CROWN CRYSTAL INVESTMENTS LIMITED

By: /s/ Min Juang
Name: Min Juang
Title:

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

HARBINGER II (BVI) VENTURE CAPITAL CORP.

By: /s/ Min Juang

Name: Min Juang
Title:

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

JAFCO ASIA TECHNOLOGY FUND II

By: /s/ Hiroshi Yamada

Name: Hiroshi Yamada
Title: Attorney

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

NOKIA VENTURE PARTNERS II L.P.

By: NVP II, LLC

Its General Partner

By: /s/ Andrew Thornborrow

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

SHAREHOLDER:

NVP II AFFILIATES FUND L.P.

By: NVP II, LLC

Its General Partner

By: /s/ Andrew Thornborrow

Schedule A

Shareholders



Name	Number of Shares Owned	Number of Shares to be Exchanged for Cash	Number of Shares to be Exchanged for Buyer Common Shares
AOI Electronics Co., Ltd.	5,000,000	2,000,000	3,000,000
Budworth Investments Ltd.	910,000	364,000	546,000
Chengwei Ventures Evergreen Fund, L.P.	1,000,000	400,000	600,000
CMF Technology Fund I Ltd.	1,500,000	600,000	900,000
China-Singapore Suzhou Industrial Park Venture Co., Ltd.	2,000,000	800,000	1,200,000
Crown Crystal Investments Limited	5,000,000	2,000,000	3,000,000
Harbinger II (BVI) Venture Capital Corp.	390,000	156,000	234,000
JAFCO Asia Technology Fund II	1,500,000	600,000	900,000
Nokia Venture Partners II L.P.	4,944,577	1,977,831	2,966,746
NVP II Affiliates Fund L.P.	55,423	22,169	33,254

Exhibit 10.29

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

2010 EXECUTIVE INCENTIVE PLAN

The following is a summary of the operation of the Executive Incentive Plan (the “Plan”) established by Alpha and Omega Semiconductor Limited (the “Company”) for the 2010 calendar year.

Participants

Executive officers and Vice Presidents.

Performance Bonus

Participants are eligible to receive a bonus based on the level of attainment of pre-specified corporate performance goals. The Company's compensation committee establishes the performance goals to be attained.

Performance Goals

The corporate performance goals for the 2010 calendar year are revenue and operating income (after bonus payout). The amount of bonus earned is based 50% on revenue achieved and 50% on operating income achieved; however, there is no payout under either goal if the operating income is below 90% of target. In addition, each participant (other than the Chief Executive Officer) is assigned individual performance goals.

Target Bonus Awards

The Company's compensation committee establishes the bonuses payable based on the level of attainment of the performance goals. The target bonuses for each named executive officer for the 2010 calendar year are as follows: Chief Executive Officer, 60% of base salary; all other named executive officers, 32% of base salary. Actual bonus payouts can range from 38% to 198% of base salary for the Chief Executive Officer and 20% to 100% of base salary for the other named executive officers based on Company performance. In addition, the bonus payable to participants (other than the Chief Executive Officer) based on attainment of corporate performance goals may be increased by up to 120% based on a subjective assessment of the achievement of individual performance goals.

Payment of Bonus

A portion of the bonus is payable following the end of the first 6 months of the 2010 calendar year based on achievement of performance goals for such semi-annual period. The bonus payable based on full-year performance is then reduced by the bonus amount paid with respect to such semi-annual period. In the event that Company performance declines in the second half of the year such that no annual bonus would be payable for the calendar year based on calendar year performance, the participant is not required to repay any bonus payment received based on the performance for the first 6 months. The participant must remain in employment with the Company through the last day of the performance periods to receive a bonus for that period.

Exhibit 10.30

ALPHA AND OMEGA SEMICONDUCTOR LIMITED

2011 EXECUTIVE INCENTIVE PLAN

The following is a summary of the operation of the Executive Incentive Plan (the “Plan”)

established by Alpha and Omega Semiconductor Limited (the “Company”) for the 2011 calendar year.

Participants

Executive officers and Vice Presidents reporting to the Chief Executive Officer.

Performance Bonus

Performance Goals

The corporate performance goals for the 2011 calendar year are revenue and operating income (after bonus payout). The amount of bonus earned is based 50% on revenue achieved and 50% on operating income achieved; however, there is no payout under either goal if the operating income is below 90% of target.

Target Bonus Awards

The Company's compensation committee establishes the bonuses payable based on the level of attainment of the corporate performance goals. The target bonuses for each named executive officer for the 2011 calendar year are as follows: Chief Executive Officer and Executive Vice President of Marketing and Product Lines, 80% of base salary; Chief Financial Officer and Chief Operating Officer, 50% of base salary; Chief Accounting Officer, 40% of base salary. Based on level of performance attained, actual bonus payouts can range from 40% to 200% of base salary for the Chief Executive Officer; 40% to 120% of base salary for the Executive Vice President of Marketing and Product Lines; 30% to 100% of base salary for the Chief Financial Officer and Chief Operating Officer; and 20% to 100% of base salary for the Chief Accounting Officer.

Payment of Bonus

A portion of the bonus is payable following the end of the first 6 months of 2011 calendar year based on achievement of performance goals for such semi-annual period. The bonus payable based on full-year performance is then reduced by the bonus amount paid with respect to such semi-annual period. In the event that Company performance declines in the second half of the year such that no annual bonus would be payable for the calendar year based on calendar year performance, the participant is not required to repay any bonus payment received based on the performance for the first 6 months of the year. The participant must remain in employment with the Company through the last day of the performance periods to receive a bonus for that period.

Exhibit 21.1



SUBSIDIARIES OF THE REGISTRANT

Subsidiary Name	Incorporated Location	Percentage Owned
Alpha and Omega Semiconductor Incorporated	California, United States	100% owned by AOS
Alpha and Omega Semiconductor (Cayman) Ltd.	Cayman	100% owned by AOS
Alpha and Omega Semiconductor (Shanghai) Co., Ltd.	China	100% owned by AOS
Alpha and Omega Semiconductor (Shenzhen) Co., Ltd.	China	100% owned by AOS
Alpha & Omega Semiconductor (Hong Kong) Limited	Hong Kong	100% owned by AOS
Alpha & Omega Semiconductor (Macau) Limited	Macau	100% owned by AOS
Alpha & Omega Semiconductor (Singapore) PTE. Ltd.	Singapore	100% owned by AOS
Alpha and Omega Semiconductor (Taiwan) Limited	Taiwan	100% owned by AOS
Agape Package Manufacturing (Cayman) Ltd.	Cayman	100% owned by AOS
Agape Package Manufacturing (Shanghai) Ltd.	China	100% owned by AOS
Agape Package Manufacturing (Hong Kong) Ltd.	Hong Kong	100% owned by AOS
Jireh Semiconductor Incorporated	Oregon, United States	100% owned by AOS
Nissi High-tech Services (Shanghai) Co. Ltd.	China	100% owned by AOS

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-172173 and 333-166403) of Alpha and Omega Semiconductor Limited of our report dated September 9, 2011 , relating to the consolidated financial statements, financial statement schedules and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

San Jose, California

September 9, 2011

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mike F. Chang, certify that:


1.	I have reviewed this report on Form 10-K of Alpha and Omega Semiconductor Limited;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: September 9, 2011

/s/ MIKE F. CHANG

Mike F. Chang

Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ephraim Kwok, certify that:


1.	I have reviewed this report on Form 10-K of Alpha and Omega Semiconductor Limited;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c.	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d.	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: September 9, 2011

/s/ EPHRAIM KWOK

Ephraim Kwok

Chief Financial Officer

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. § 1350, AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Mike F. Chang, the chief executive officer of Alpha and Omega Semiconductor Limited (the “Company”), certify for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge,


a.	the Annual Report of the Company on Form 10-K for the fiscal year ended June 30, 2011 (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


b.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: September 9, 2011



	/s/ MIKE F. CHANG
	Mike F. Chang
	Mike F. Chang
	Chief Executive Officer

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. § 1350, AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Ephraim Kwok, the chief financial officer of Alpha and Omega Semiconductor Limited (the “Company”), certify for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge,


a.	the Annual Report of the Company on Form 10-K for the fiscal year ended June 30, 2011 (the “Report”), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and


b.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: September 9, 2011

/s/ EPHRAIM KWOK

Ephraim Kwok

Chief Financial Officer