JOINT VENTURE CONTRACT

A

List of the Joint Venture Products

B

Schedule of Capital Contributions

(a)

“ Affiliate ” means, in relation to Party A, any enterprise or other entity which, directly or indirectly, is controlled by Party A; the term “control” meaning ownership of fifty percent (50%) or more of the registered capital or the power to appoint the general manager, factory chief or other principal person in charge of an enterprise or other entity.

(b)

“ Articles of Association ” means the Articles of Association of the Company executed on March 1, 1995 and as amended and restated.

(c)

“ Board ” and “ Board of Directors ” mean the board of directors of the Company.

(d)

“ Business License ” means the business license of the Company issued by the SAIC dated March 28, 1995 and any amendment to or renewal, replacement or extension of such license.

(e)

“ China ” and “ PRC ” mean the People’s Republic of China excluding Hong Kong, Macau and Taiwan for purposes of this Contract.

(f)

“ Company ” means Leshan-Phoenix Semiconductor Company Limited.

(g)

“ Effective Date ” means the effective date of this Contract, which shall be the date on which this Contract and the Articles of Association have been approved by the Examination and Approval Authority without varying their terms or imposing any additional conditions, unless otherwise agreed by the Parties in writing.

(h)

“ Examination and Approval Authority ” means the authority entrusted by the Chinese government to approve this Contract, the Appendices attached hereto and the Articles of Association.

(i)

“ Export-oriented Enterprise ” means the status of the Company to be granted by the Examination and Approval Authority under PRC law.

(j)

“ Feasibility Study ” means the Feasibility Study Report dated November 4, 1994 regarding the feasibility of the joint venture and the establishment of the Company, together with the Capital Increase and Expansion Plan for the Wafer Fab Products dated June 2002.

(k)

“ Joint Venture Products ” means the products listed in Appendix A attached hereto and any other similar, related or complementary products that the Board approves for production by the Company.

(l)

“ Joint Venture Term ” means the term of this Contract as set forth in Article 17.01 hereof including any extensions of such term pursuant to Article 17.02 hereof.

(m)

“ Land Use Rights Grant Contract ” means the relevant contract or contracts for the grant of the land use rights over the Site between the Company and the Municipality of Leshan.

(n)

“ Management Personnel ” means the Company’s General Manager, Deputy General Manager and other management personnel designated by the Board.

(o)

“ ON ” means Party B or any of its Affiliates.

(p)

“ Plant ” means the Company’s manufacturing facilities located at the Site where the Joint Venture Products will be produced.

(q)

“ Renminbi ” or “ RMB ” means the lawful currency of China.

(r)

“ SAFE ” means the State Administration of Foreign Exchange of the People’s Republic of China and/or a local branch thereof, as appropriate to the context.

(s)

“ SAIC ” means the State Administration for Industry and Commerce of the People’s Republic of China and/or a local branch thereof, as appropriate to the context.

(t)

“ Services Contract ” means the contract for the provision of services between the Company and Party A.

(u)

“ Site ” means the parcels of land located in Leshan, Sichuan Province, on which the facilities of the Company are situated.

(v)

“ Technologically Advanced Enterprise ” means the status of the Company to be granted by the Chinese government under PRC law

(w)

“ Technology ” has the meaning as defined in the Technology License Contract, as amended.

(x)

“ Technology License Contract ” means the technology license contract dated February 24, 1995 as amended so far under which the Company is the licensee.

(y)

“ Third Party ” means any entity or person other than the Parties or their Affiliates.

(z)

“ United States Dollars ” or “ US$ ” means the lawful currency of the United States of America.

(aa)

“ Working Personnel ” means all employees and staff of the Company, other than the Management Personnel.

(bb)

“ Wafer Fab Products ” means the wafer fab products as listed in Appendix A.

1.02

Interpretation

2.01

The Parties

(a)

Party A, Leshan Radio Company, Ltd., a Chinese limited liability company registered in Leshan, Sichuan Province, China, with its legal address at 27 West People’s Road, Leshan, Sichuan Province, China.

(b)

Party B, SCG (China) Holding Corporation, a company established and existing under the laws of the State of Delaware, U.S.A., with its legal address at 5005 McDowell Road, Phoenix, Arizona 85008, U.S.A.

2.02

Representations, Warranties and Undertakings

(a)

Each of Party A and Party B hereby represents, warrants and undertakes to the other Party that, as of the date of execution hereof and as of the Effective Date:

(i)

it is duly organized, validly existing and in good standing under the laws of the place of its establishment or incorporation;

(ii)

it has all requisite power, authority and approval required to enter into this Contract and upon the Effective Date will have all requisite power, authority and approval to perform fully each and every one of its obligations hereunder;

(iii)

it has taken all action necessary to authorize it to enter into this Contract and such Party’s representative whose signature is affixed hereto is fully authorized in writing to sign this Contract and to bind such Party thereby;

(iv)

upon the Effective Date, this Contract shall constitute its legal, valid and binding obligation;

(v)

neither the execution of this Contract, nor the performance of such Party’s obligations hereunder, will conflict with, or result in a breach of, or constitute a default under, any provision of its business license or articles of association, or any law, rule, regulation, authorization or approval of any government agency or body, or of any contract or agreement to which it is a party or is subject; and

(vi)

all material documents, statements and information of or provided by any governmental body in its possession relating to the transactions contemplated in this Contract have been disclosed to the other Party, and no document previously provided by it to the other Party contains any untrue statement of material fact.

(b)

If any Party does not perform the above undertakings and representations, it shall be considered a breach of this Contract.

(c)

At the time of the execution of this Contract, each Party shall provide the other Party with a certified copy of its business license.

2.03

Change of Legal Representative

3.01

Name and Address of the Company; Branches

(a)

The name of the Company shall be “ ” in Chinese, and “Leshan-Phoenix Semiconductor Company Limited” in English.

(b)

The legal address of the Company shall be 27A West People’s Road, Leshan, Sichuan Province, China.

(c)

In accordance with its business needs, the Company may establish branch offices within or outside China upon the decision of the Board and approval by the relevant governmental authorities.

3.02

Limited Liability Company

3.03

Laws and Decrees

3.04

Code of Conduct

4.01

Purpose

4.02

Scope of Business

4.03

Scale of Production

5.01

Total Investment

5.02

Registered Capital

5.03

Contributions to Capital

(a)

Party A’s contribution to the registered capital of the Company shall be Thirty-Nine Million Seven Hundred Twenty-Five Thousand and Four Hundred United States Dollars (US$39,725,400), representing a thirty-nine percent (39%) share of the registered capital of the Company. Party A’s contribution to the registered capital shall include Thirty-Eight Million Three Hundred Sixty Thousand and Four Hundred Seventy-Seven United States Dollars (US$38,360,477) in cash, equipment valued at Four Hundred Eighty-Three Thousand Nine Hundred and Twenty-Three United States Dollars (US$483,923), the land use rights of a parcel of land located at No. 27, West People’s Road, the total area of which is 26,853.80 square meters and is valued at Seven Hundred Twenty-One Thousand United States Dollars (US$721,000), and additional land use rights and the building thereon located at No. 27, West People’s Road and currently used for Expatriate Apartments valued at One Hundred Sixty Thousand United States Dollars (US$160,000).

(b)

Party B’s contribution to the registered capital of the Company shall be Sixty-Two Million One Hundred Thirty-Four Thousand and Six Hundred United States Dollars (US$62,134,600), representing a sixty one percent (61%) share of the registered capital of the Company.

(c)

The unpaid registered capital amount as of the date hereof will be paid by installment contribution in accordance with Appendix B.

5.04

Payment of Registered Capital and Conditions Precedent thereto

(a)

Subject to Article 5.04(c) below, each Party shall make its contribution to the registered capital of the Company in accordance with the schedule set forth in Appendix B.

(b)

In the event that a Party fails to make its capital contribution, in whole or in part, in accordance with the provisions of Article 5.04(a) and Appendix B, such Party shall be liable to pay liquidated damages to the Company in the form of simple interest on the unpaid amount from the time due until the time paid at the rate of two percent (2%) above the six-month London Interbank Offered Rate (LIBOR) for United States Dollars up to a maximum of US$200,000.00. Notwithstanding the above provisions of this Article 5.04 (a), if the failure of a Party to make its capital contribution, in whole or in part, is not remedied within thirty (30) days of notice from any other Party, said other Party shall have the right to terminate this Contract pursuant to Article 18.01(c)(ix) hereof.

(c)

The capital contributions to be made by the Parties under this Contract shall be reduced by the amount of any distributable profits that are not distributed to the Parties as dividends, and such profits may be reinvested in the business of the Company as determined by the Board. If it results in changing the payment method of the capital contribution, it shall apply to the Examination and Approval Authority for approval.

5.05

Investment Certificate

5.06

Assignment of Registered Capital

(a)

Each Party hereto undertakes to the other Party and to the Company that it shall not assign, sell, transfer or otherwise dispose of all or any part of its interest in the registered capital of the Company or its rights, obligations and benefits under this Contract unless (i) each of the other Party hereto shall have consented in writing to such assignment, sale, transfer or disposition or (ii) such assignment, sale, transfer or disposition complies with the terms of this Article 5.06.

(b)

When one Party (the “ Disposing Party ”) wishes to sell, assign or otherwise dispose of all or part of its share of the registered capital (the “ Offered Share ”), it shall notify the other Party (the “ Non-Disposing Party ”) in writing (the “ Transfer Notice ”) of the identity of the proposed purchaser and provide the Non-Disposing Party a copy of the offer including all of the proposed terms and conditions of such sale, assignment or disposal. The Transfer Notice shall include a statement confirming that there is no supplementary consideration not stated in the offer. The Non-Disposing Party shall have a preemptive right to purchase all but not part of such Offered Share in proportion to its respective equity interests in the Company on terms and conditions no less favorable to the Disposing Party than those specified in the Transfer Notice.

(c)

The Non-Disposing Party may exercise their preemptive right by giving notice to the Disposing Party of its intention to purchase the Offered Share within 30 days after receipt of the Transfer Notice (“ Option Exercise Period ”). Upon issuance of such notice, the Parties shall execute such documents as are required to effect the transfer. The purchase shall be made within 30 days after receipt of any required government approvals of the transfer.

(d)

If the Non-Disposing Party should fail to exercise their preemptive right, the Disposing Party may sell all but not part of the Offered Share to the proposed purchaser at a price not less than that provided in the Transfer Notice. The Disposing Party shall provide the Non-Disposing Party with a copy of any executed written equity transfer agreement with the purchaser.

(e)

It shall be a condition precedent to the right of any Party to transfer any of its registered capital that (i) the transfer shall be done in accordance with Chinese law, (ii) the transferee agrees to be bound by and entitled to the obligations and benefits of this Contract as if an original party hereto; and (iii) neither the business of the Company nor the performance of its contracts shall be interrupted, nor shall its organizational structure be affected by any such sale, assignment or other disposal of such registered capital. Notwithstanding the foregoing, unless the written consent of the Disposing Party is obtained, upon any assignment, sale or other disposal of the Disposing Party’s entire interest in the registered capital of the Company, the Company shall remove from its name all references to the name of the Disposing Party and shall cease using

all packaging, letterhead, stationery, promotional and advertising materials and other items which contain any reference to the name of the Disposing Party.

(f)

Subject to the satisfaction of the terms and conditions set forth in this Article 5.06, the Parties shall cause their directors appointed to the Board to approve any sale, assignment or other disposal of registered capital hereunder. Any such sale, assignment or other disposal shall, to the extent required by law, be submitted to the Examination and Approval Authority for examination and approval. Upon receipt of the approval of the Examination and Approval Authority, the Company shall register the change in ownership with the SAIC.

(g)

The provisions on assignment set forth in this Article 5.06 shall not apply to any sale or assignment of registered capital by any Party to any of its Affiliates, and the other Party shall be deemed to have consented to, and the Parties shall cause their directors appointed to the Board to approve, any such sale or assignment. Any such sale or assignment shall, to the extent required by law, be submitted to the Examination and Approval Authority for examination and approval. Upon receipt of such approval, the Company shall register the change in ownership with the SAIC.

(h)

The share of the registered capital owned by Party B shall not be lower than 25% of the registered capital of the Company.

5.07

Encumbrance of Investment

5.08

Increase of Registered Capital and Additional Financing

(a)

Any increase in the registered capital of the Company must be approved by a unanimous vote of the members of the Board present in person or by proxy at a duly constituted meeting thereof and submitted to the Examination and Approval Authority for examination and approval. Upon receipt of the approval of the Examination and Approval Authority, the Company shall register the increase in registered capital with the local branch of the SAIC. Unless otherwise agreed by the Parties, any increase in the registered capital shall be made by the Parties in the same proportion as their respective then-existing interests in the registered capital of the Company. The agreement on any capital increase may specify the time limits for payment of such capital increase. If any Party fails to contribute its share of the capital increase within the time limits set out therein, such Party shall pay interest to the Company on the amount of the overdue contribution at the rate of two percent (2%) above the six-month LIBOR for United States Dollars as in effect on the date such contribution is due. Such interest shall be payable monthly in arrears from and including the date on which such contribution is due and to but excluding the date on which such contribution (together with all interest accrued thereon) is paid in full.

(b)

In the event that any Party fails to make its registered capital contribution (or any portion thereof) as provided herein or fails to provide its share of any increase in the Company’s registered capital as described in (a) above, then the non-defaulting Party shall issue a notice in writing for such default to the defaulting Party. If the defaulting Party fails to make the contribution within one month of issuance of the written notice, in addition to any other rights the non-defaulting Party may have against the defaulting Party, (i) the non-defaultingParty, (ii) a third party designated by the non-defaulting Party, or (iii) the non-defaulting Party together with a third party designated by the non-defaulting Party, may undertake the defaulting Party’s rights and obligations under this Contract by purchasing such portion, or the non-defaulting Party may apply for the dissolution of the Company.

(c)

The Company shall fund the difference between the total amount of investment and registered capital through long-term loans obtained from financial institutions. If the Company cannot obtain all or a portion of the required loans on the strength of its own credit, then each of the Parties, either directly or through an Affiliate, shall raise loans for the Company in the same proportion as their respective contributions to the registered capital. If any Party is unable to raise loans in the proportion applicable to such Party, the other Party shall consider helping arrange for such loans. The Board shall decide the specific timing and amounts of the Company’s loans. Loans shall bear interest at the actual loan interest rate, following confirmation by the Board. Such loans shall be repaid by the Company on a pari passu basis in accordance with the decision of the Board based upon the Company’s ability to repay without endangering the financial stability of the Company. The Company may fund the difference between the total amount of investment and registered capital through overseas loans obtained from financial institutions.

(d)

In the future, the Company may obtain additional financing by utilizing its own internal funds, through loans from sources in China or outside China, or through increased investment by the Parties.

6.01

Responsibilities of Party A

(a)

assist the Company in obtaining all necessary approvals, permits and licenses for the operation of the Company;

(b)

assist the Company in liaising with the relevant authorities to effectively procure the external water supply, fuel supply, power supply, transportation, communications, and other services required for the Plant at the most preferential prices available;

(c)

assist the Company in obtaining raw materials from sources in China;

(d)

assist the Company in opening Renminbi and foreign currency bank accounts and in obtaining Renminbi loans when necessary;

(e)

assist the Company in arranging for the transportation of imported equipment and materials between ports in China and the Plant;

(f)

assist with the procedures for applying for and procuring licenses, and on carrying out all customs procedures, for the import of machinery, equipment, materials, supplies and office equipment;

(g)

assist the expatriate employees of the Company to obtain all necessary entry visas and work permits;

(h)

assist the Company in recruiting various types of qualified Chinese personnel;

(i)

assist the Company in obtaining the Certificate of Authentication of its status as an “Integrated Circuit (IC) Manufacturing Enterprise” permitting the Company to be entitled to all the Value-Added Tax (“ VAT ”) and other investment incentives as provided for by the governments including in State Council Document No. (2000) 18 on Policies to Encourage the Development of the Software and Integrated Circuit (IC) Industries dated on June 24, 2000 and in policies promulgated by the Sichuan Provincial Government ;

(j)

assist the Company in obtaining approval of its status as a Technologically Advanced Enterprise and/or Export-oriented Enterprise and securing the appropriate confirmation certificates; thus permitting the Company to enjoy the preferential tax treatment and other benefits available to such enterprises under the current and future government sponsored programs including programs promulgated under the western region modernization policies;

(k)

assist the Company to obtain access to sources of foreign exchange;

(l)

assist the Company to apply for and obtain approval from the Customs that the Company’s factory and all other facilities will be treated as a bonded factory or warehouse in accordance with Chinese legal regulations;

(m)

assist the Company in applying for and obtaining any other most preferential tax treatment and other investment incentives available under applicable laws and regulations, in addition to those listed in this Article 6.01;

(n)

assist the Company in getting duty and VAT exemption that may be available on all self-used materials and equipment; and

(o)

handle other matters entrusted by the Company from time to time.

6.02

Responsibilities of Party B

(a)

when requested by the Company, assist the Company in the purchase of equipment, supplies and materials manufactured inside or outside China;

(b)

assist the Company in obtaining loans when necessary;

(c)

assist the Company in recruiting expatriate and local personnel;

(d)

assist the Company in arranging training of Company personnel in China or abroad as contemplated in the Technology License Contract;

(e)

assist the Company in generating export opportunities; and

(f)

handle other matters entrusted by the Company from time to time.

6.03

If, at the time or times of Party B’s performance hereunder, a validated U.S. export license is required for Party B or their Affiliates to lawfully export goods or associated technical data, then the issuance of such license shall constitute a condition precedent to Party B’s obligations hereunder.

6.04

No Compensation

7.01

Technology

7.02

Trademarks

(a)

The Company is not authorized to use the name or trademark of any Party in its name or otherwise, except as specifically authorized in writing by such Party.

(b)

The Company shall develop and register its own trademark. The use of such trademark shall be decided upon by the Board.

8.01

Distribution and Sales- Non Wafer Fab Products

(a)

Unless unanimously decided otherwise by the Board, each Party, directly or through designated Affiliates, shall purchase the Company’s products in proportion to its contribution to the registered capital, and the pricing of such purchases shall follow the principles provided in the Board resolutions dated June 12, 1997 and any subsequent unanimous Board resolutions.

(b)

Each Party or its Affiliates may act as agent for the sale of such Party’s portion of the Company’s production. In such case, such Party or its Affiliates shall receive a sales commission.

(c)

The majority of the Company’s products will be exported directly or indirectly.

(d)

Party A may request the Company to perform the assembly and test of devices by the Company which are not produced by ON. Such production would use wafers provided by Party A on a consignment basis and take place within Party A’s pro rata share of the Company’s manufacturing capacity. However, the quantity and specifications of each device requested must meet the Company’s manufacturability requirements as defined by the General Manager of the Company.

(e)

Party A and Party B may request the Company to perform the assembly and test of devices by the Company using wafers provided by Party B or its Affiliates, on a consignment basis and taking place within each Party’s pro rata share of the Company’s manufacturing capacity. However, the quantity and specifications of each device requested must meet the Company’s manufacturability requirements as defined by the General Manager of the Company.

(f)

The New Products for non wafer fab listed in Appendix A will be sold exclusively to the Parties or their affiliates. However, the Company may sell such New Products to third parties if the Board agrees such sales are in the best interests of the Company.

8.02

Distribution and Sales - Wafer Fab Products

(a)

The Wafer Fab Products listed in Appendix A will be sold exclusively to the parties or their affiliates. However, the Company may sell such New Products on the open market if the Board agrees such sales are in the best interests of the Company.

(b)

For the first three years of operation of the Wafer Fab, the pricing for wafer fab products will be set at the lower of (1) prices that are calculated to generate a return on invested equity equal to the weighed average annual interest rate of borrowing of the Company as determined by the Board at the end of each fiscal year plus 6% or (2) the cost at which such products could be purchased from an unrelated third party in an arm’s-length transaction. Thereafter, pricing will be set at a level that generates a return on invested equity equal to the weighed average annual interest rate of borrowing of the Company as determined by the Board at the end of each fiscal year plus 6%.

(c)

Each party will have the right to purchase Wafer Fab Products from the Company in proportion to their respective equity interests therein. In order to exercise such right, each party will commit at least one year in advance to purchase specified amounts of Wafer Fab Products. If a party fails to purchase any of its committed amount, then it shall pay the Company an underutilization charge as defined in the Board Resolution dated May 16, 2002. In addition, once a party makes a commitment to purchase a given amount of Wafter Fab Products, it may not reduce such amount in any subsequent year, except if (a) such reduction is caused by the exercise by either of the other parties of its right to regain its share of the total production capacity as set out in Section 8.02d, or (b) either of the other parties agrees to take over the reduced amount.

(d)

If in any year a party does not commit to purchase all the Wafer Fab Products it is entitled to purchase (such party a “ Declining Party ”), each of the other parties will have the right to commit to purchase a pro rata portion (based on such party’s registered capital in the Company, calculated for such purpose not taking into account the equity owned by the Declining Party) of such New Products. A Declining Party may upon one year’s advance notice regain its share of production.

(e)

the Company shall increase its production capacity to satisfy the demands of the parties for the Wafer Fab Products. If total demand exceeds the production capacity of the Company, the parties agree that the Company will raise funds, through additional pro rata capital contributions or loans, to expand its production capacity.

(f)

No party or any of its affiliates may resell to any third party wafers produced by the Company utilizing the design of any other party. However, a party and any of its affiliates may sell finished products utilizing wafers produced by the Company.

9.01

Formation of the Board

(a)

The Board shall consist of nine (9) directors, three (3) of whom shall be appointed by Party A, and six (6) of whom