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amkor - legal

Amkor Announces Interim Ruling In Tessera Arbitration

Chander-based Amkor Technology, Inc. announced that on July 5, 2012, the Arbitration Panel from the International Court of Arbitration of the International Chamber of Commerce issued an interim order in the arbitration proceedings initiated in August 2009 relating to Amkor’s license agreement with Tessera, Inc.

The panel found that no royalties are due to Tessera on seven of the ten asserted U.S. patents. The panel also found that royalties are due on four foreign patents related to U.S. patents that the panel previously found to be royalty bearing. The panel has reserved for later decision the issues of the amount of royalties and pre-judgment interest due, the allocation of costs, and the question of whether Tessera intends to pursue its allegations regarding other patents which have not yet been addressed.

The Company currently estimates that the damages and interest could be around $30 million with respect to the foreign patents. The factors affecting the calculation of damages and interest with respect to the U.S. patents are more complex and require further analysis before the Company can make an estimate, which could be more or less than the amount estimated for the foreign patents. In both cases, the ultimate amount of damages and interest is subject to the determination of which package families the patents apply to, whether those packages meet criteria previously laid out by the panel, overlaps among the packages, the final date through which royalties are applicable and other factors.

The panel also ruled that the license agreement, under which the royalties were awarded, was terminated by Tessera as of February 17, 2011. Based in part on this ruling that the license has terminated, on July 6, 2012, Tessera filed a complaint in the U.S. District Court for the District of Delaware. The complaint seeks injunctive relief and damages with respect to Amkor’s alleged infringement of one of the U.S. patents that the arbitration panel found to be royalty bearing. The Company strongly disputes Tessera’s claims and intends to vigorously defend against them.

“Although we are disappointed that the panel did not rule in our favor on all of the claims, we prevailed on the patents for which Tessera made the largest claims for royalties and we expect that the amount of the award will be well below the more than $400 million claimed by Tessera in the arbitration,” said Ken Joyce, president and chief executive officer of Amkor. “Furthermore, we do not expect that the final amount of the panel’s award will have a material impact on our liquidity, and we do not believe the ruling will interfere in any significant way with our ability to use our technology, conduct our business or service our customers.”

The Company expects to record a charge to operating results in the second quarter 2012 in respect of the panel’s award. Payment of the award is not anticipated before the fourth quarter 2012, after the proceedings to determine the final amount of the award are concluded. We expect to use cash on hand and/or proceeds from borrowings under our existing credit line or other sources to make the payment.

Amkor is a leading provider of semiconductor packaging and test services to semiconductor companies and electronics OEMs. More information about Amkor is available from the company’s Securities and Exchange Commission filings and on Amkor’s website: www.amkor.com.