Under the agreement, ASE and TDK plan to own 51 percent and 49 percent, respectively, of the newly created entity. The indicative name of the joint venture company will be ASE Embedded Electronics Incorporated, and its manufacturing facility is planned to be located in the Nantze Export Processing Zone, Kaohsiung City, Taiwan.

Through its strengths in manufacturing excellent inductive devices and magnetic heads for hard disk drives, TDK developed its proprietary SESUB technology by harnessing TDK's signature technologies in ultrafine processing and materials. The SESUB technology enables semiconductor chips to be thinned down to as low as 50 um and embedded in a four-layer plastic substrate.

As a leader in System in Package (SiP) technology, ASE continues to expand its product and service portfolio through collaboration with key suppliers and partners. ASE SiP solutions using SESUB technology will offer a robust embedded solution in enabling a wide number of applications such as PMIC, sensors and RF tuners etc. The planned joint venture business model aims to leverage on TDK's success in delivering SESUB technology to the market with ASE's capabilities in advanced packaging, test and module level solutions for semiconductor miniaturization.

"With the anticipated need for further miniaturization and weight reduction of smartphones and wearable devices in the future, demand for semiconductors embedded in substrates, such as SESUBs, is expected to increase globally," says Mr Takehiro Kamigama, CEO and President of TDK Corporation.

"TDK has already been producing SESUBs at its Kofu Plant, but to meet the anticipated increase in demand, it will establish the joint company in Taiwan to add to its production capacity with ASE, which possesses technologies including assembly of IC packages and other items, and boasts a world-class performance record in product testing. The joint venture establishment will create a structure for full-scale mass production," added Mr Takehiro Kamigama.

"ASE serves a diverse group of customers including several major players supplying to the portable and wearable consumer market and is a leader in SIP integration using its advanced packaging solutions and test expertise. TDK, on the other hand, has a proven proprietary embedded substrate technology addressing the market needs of integrating more chips and functions, higher performance, lower power consumption and better heat dissipation onto a smaller form factor," says Dr Tien Wu, COO, ASE Group.

"We see this powerful alliance as an added value to the ASE SIP eco-system and together, catapulting TDK's SESUB technology into the forefront as an industry standard," added Dr Tien Wu.

The proposed establishment of and capital injection into the joint venture company will be subject to various regulatory approvals or consents (including but not limited to the approvals of the Taiwan Fair Trade Commission and Export Processing Zone Administration).