Platon Martinez Flores San Pedro Leaño

August 29, 2008 BIR RULING [DA-(C-053) 185-08] DA594-99 Platon Martinez Flores San Pedro Leao 6th Floor, Tuscan Building 114 V.A. Rufino Street Legaspi Village Makati City Attention: Atty. Hector A. Martinez and Atty. Anthony Brett M. Abenir Gentlemen : This refers to your letter dated July 25, 2008 stating that your client, ON Semiconductor Philippines, Inc. (ON Semi Phils.), is a domestic corporation duly registered with the Securities and Exchange Commission (SEC) to engage in, conduct, carry on and operate the business of manufacturing, producing, assembling, processing, servicing, importing, exporting, buying, selling, distributing and marketing of electronic products and the parts, components and accessories therefor, including specifically semiconductor devices of every type and description; that it has an authorized capital stock of Thirty Million Pesos (P30,000,000.00) divided into Three Million (3,000,000) shares with a par value of Ten Pesos (P10.00) per share; that Two Million Two Hundred Fifty Thousand shares (2,250,000) are issued and outstanding and the registered owners of said shares are Semiconductor Components Industries (SCI, LLC) and five individuals holding one (1) share each, as follows: Name of Stockholders of Record of ON No. of Shares Semi Phils. SCI, LLC 2,249,995 Hector A. Martinez 1 Augusto San Pedro 1 Richard Cohen 1 Bharathan Nair 1 Chandramohan A/L Subramaniam 1 Total 2,250,000 ======== that SCI, LLC is a limited liability company organized and existing under the laws of the State of Delaware, USA; that it develops, manufactures and sells integrated circuit semiconductor and other related products; that it has operations in the United States and numerous foreign countries; that on the other hand, AMIS Holdings, Inc. (AMIS Holdings) is a corporation duly organized and existing under the laws of the State of Delaware, USA and is likewise engaged in the development, manufacture and sale of integrated circuit semiconductor and other related products; that it also has operations in the United States and numerous foreign countries; that on or about March 17, 2008, SCI, LLC acquired AMIS Holdings which then has become wholly-owned by SCI, LLC; that AMI US is a corporation organized and existing under the laws of the State of Delaware, USA; that it is a wholly-owned subsidiary of AMIS Holdings; that AMIS US wholly-owns AMIS Semiconductor Philippines, Inc. (AMIS Phils.) a company organized and existing under the laws of the Republic of the Philippines; that as an integral part of a worldwide corporate reorganization among the subsidiaries and affiliates of SCI, LLC, SCI, LLC shall make a capital contribution of its shares in ON Semi Phils. in favor of AMIS Holdings, without the issuance of additional shares to SCI, LLC (the capital contribution); that the capital contribution by SCI, LLC to AMIS Holdings' capital contribute the same shares in ON Semi Phils. to AMI US without the issuance of additional shares to AMIS Holdings (the capital contribution); that the capital contribution of AMIS Holdings to the capital account of AMI US shall be in the form of paid-in surplus; and that subsequently, it is contemplated that AMIS Phils. will merge into ON Semi Phils. ScAHTI Based on the foregoing representations, you now request confirmation of your opinion that 1. No taxable gain or loss shall be recognized (i) by transferor SCI, LLC in the transfer of the shares in ON Semi Phils. in favor of transferee AMIS Holdings, and (ii) by transferor AMIS Holdings in the subsequent transfer of the shares in ON Semi Phils. in favor of transferee AMI US, since the transfer are being made as capital contribution, without issuance of additional shares; aESTAI 2. The transferees on the transfer of the shares in ON Semi Phils. (i) from SCI, LLC to AMIS Holdings and subsequently (ii) from AMIS Holdings to AMI US, do not realize taxable income and therefore are not subject to Philippine income tax; 3. The transfers of the shares in ON Semi Phils. (i) from SCI, LLC to AMIS Holdings and subsequently (ii) from AMIS Holdings to AMI US, are not subject to the donor's tax; and 4. The Corporate Secretary of ON Semi Phils. be authorized to record ON Semi Phils.' Stock and Transfer book the transfer of the shares in ON Semi Phils. from SCI, LLC to AMIS Holdings and from AMIS Holdings to AMI US. SEDICa In reply thereto, please be informed that your opinion is hereby confirmed as follows 1 & 3. No taxable gain or loss shall be recognized (i) by transferor SCI, LLC in the transfer of the shares in ON Semi Phils. in favor of transferee AMIS Holdings, and (ii) by transferor AMIS Holdings in the subsequent transfer of the shares in ON Semi Phils. in favor of the transferee AMI US since the transfers are being made as capital contributions without issuance of additional shares. aAHDIc This is fortified in BIR Ruling No. 351-92 dated December 8, 1992 and later reiterated in BIR Ruling No. DA594-99 dated October 7, 1999, where it was held that ". . . since the SWMC shares are not being sold or transferred by ASI to ASPHI for a valuable consideration but are being transferred as additional capital contribution, without the necessity of ASPHI issuing additional shares of stock; and considering further that that transferred SWMC shares will merely increase the basis of the principal stockholder's (ASI) stocks but will not change its proportionate equity in ASPHI, the transfer of the SWMC shares will not constitute taxable income but as capital investment, hence, it is not subject to income tax as well as to the donor's tax." THIASE Accordingly, the transfer of shares in ON Semi Phils. by SCI, LLC to AMIS Holdings and the subsequent transfer of the same shares from AMIS holdings to AMI US by way of capital contribution to the transferee entities are integral parts of the corporate reorganization among the subsidiaries and affiliates of SCI, LLC pursuant to the Contribution Agreement dated July 17, 2008, by and among SCI, LLC, AMIS Holdings and AMI US. In other words, no sale or other disposition of the shares in ON Semi Phils. ever take place. 2. The transferees in the transfer of the shares in ON Semi Phils. (i) from SCI, LLC to AMIS Holdings and subsequently (ii) from AMIS Holdings to AMI US, do not realize taxable income and therefore are not subject to Philippine income tax, considering that the corporate reorganization took place abroad. Finally, the Corporate Secretary of ON Semi Phils. shall be authorized to record in ON Semi Phils.' Stock and Transfer book the transfer of the shares in ON Semi Phils. from SCI, LLC to AMIS holdings and from AMIS Holdings to AMI US. HSAcaE This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service