Ann: Continued Suspension from Quotation, page-305

It's easy to understand how some people think that EM are going to dump AKP and go it alone. China has a history of stealing the IP of western companies. However, this hypothesis discounts AKP's knowledge and experience of the last 15+ years to zero. It assumes that if EM is able to design the chips for manufacture, organise that manufacture and then package the chips, that they don't need AKP at all. This is incorrect.

If you have ever worked in a company that has wanted to branch into something outside of their expertise, then you will readily understand this. You can slowly build up expertise by hiring key people with the required experience and client contacts. This is a slow and costly process and not always successful. I have seen this process many times.

You can also achieve the goal by buying out another company with the required expertise and hey presto you can now branch out in this direction. It's a costly exercise, but it has more chance of success. It does bring its challenges with it to intergrate the two companies. Sometimes it results in a reverse takeover where the original company tries to bite off more than it can chew. This has happened to a 70,000 employee company I was a part of. Another company I was in successfully bolted on a multitude of other companies to become a world leader.

Another option is to partner with a company to win work that brings the strengths of both companies together. This way, you can still achieve the end goal of being able to attract work that you were previously not able to win and with significantly less risk and cost. This happens all the time. A global example of this is the AUKUS agreement. Australia partnering with the UK and US to deliver nuclear powered submarines. Why do we need the UK and US? Why don't we just get our own nuclear industry? Well we could. Just look at the above options and we could do it, but it would take an enormous amount of time. It would cost a lot of money and there would be risk attached, but we could do it. There would also be political consequences perhaps.

So it is with AKP and EM. There is a partnership in place where each partner benefits from the other's expertise and knowledge. If EM were to want option #1 of hiring their own people with the required expertise, where would they get these people? We are talking about DSR on a MEMS chip here. Not analogue. So there are people in AKP. Where else? don't discount their expertise here.

EM might want to bolt on a company to achieve their goals. But there is only 1 such company - AKP. They have tried to buy shares in AKP and at the time asked if there were other ways to increase their share holding. So this is still an option if the Chinese bureaucracy would comply.

So I don't believe that there is a real issue here. I see how both parties benefit and how both would not want to try the alternatives. The company seems to indicate as much as well.