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ASUSTek and Advantech announce strategic alliance

Advantech UK : 30 September, 2005  (New Product)
ASUSTeK TSE:2357 and Advantech TSE:2395 announce that the two companies will enter a strategic alliance through a share swap. ASUSTek and Advantech will collaborate on new product developments, manufacturing, and quality, and set up a joint venture (tentatively AdvanSus) to pursue new business opportunities in industrial computing. ASUSTeK and Advantech are the global leaders in commercial computing and industrial computing respectively.
The strategic alliance is expected to impact both companies' long-term developments. Combining their respective complimentary core competences, ASUSTek and Advantech will exert their efforts together to develop the highly potential Industrial computing segments, address the customer needs, and create shareholders' value.

Under the terms of the Strategic Alliance Agreement, ASUSTeK will hold 15% of Advantech's share and one seat of Advantech's Board of Director plus one supervisor. After the share swaps, Advantech will own about 1.4% of ASUSTeK's shares. In details, ASUSTeK will issue new shares in exchange of 10% Advantech's share after Advantech's capital increase. For the rest 5%, Advantech will arrange specific current shareholders to make the share exchange with ASUSTek. The swap ratio is set at 1.13 share of Advantech to 1 share of ASUSTeK. The ratio is mainly derived from both companies' recent stock market prices, with reference to other key performance indicators such as net worth per share, earnings per share, and future business potentials.

ASUSTeK and Advantech will contribute dedicated talents and resources to the new joint venture, which will enter the highly potential markets such as industrial computing's Design & Manufacturing Service, industrial mobile, industrial motherboard, and industrial server segments. The joint venture is expected to start operation from mid 2006.

Mr. Jonney Shih, Chief Executive Officer, ASUSTek, states that 'Under the leadership of Mr. KC Liu, Advantech has created high brand value and outstanding business results in industrial computing. It is a respectable learning model.

Through many years of efforts, ASUSTek has established a solid foundation in commercial computing related areas, such as motherboard, graphic cards, and notebook. ASUSTek will continue developing products of superior performance via internal R&D and other functions' efforts. Through the strategic alliance with Advantech, a best-in-class company, ASUSTek expects to further create synergy in industrial computing, and heads toward a world-class leading hi-tech company.

In the future, Advantech and ASUSTek will dedicate to offering customers more competitive technologies, quality, efficiency, cost and flexibility. Both companies will excel from the win-win partnership.'

Mr. KC Liu, Chief Executive Officer, Advantech, states that 'The vision for Advantech to ally with ASUSTeK is to leverage ASUSTeK's expertise in quality, R&D and cost control, which will take the low-volume, high-customization, and service-driven industrial computing to the next level. The alliance will enter the industrial computing's Design & Manufacturing Service, industrial mobile, industrial motherboard, and industrial server segments. The long-term goal is that ASUSTek and Advantech, the two global brands, will enhance each other's leading positions in the commercial computing and industrial computing areas.

In addition to the complimentary technologies, ASUSTek and Advantech are very similar in management philosophy and company culture. I believe this is key to the success of the alliance. I consider Mr. Shih's leadership consistent with the level-five leader as described in my favorite book, Good to Great. I am very confident in the long-term development of this strategic alliance under the leadership of Mr. Shih.'
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