exh_993.htm

Exhibit 99.3

April 25, 2012

O2MICRO INTERNATIONAL LIMITED

(Incorporated in the Cayman Islands with limited liability)

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

TO BE HELD ON FRIDAY, JUNE 22, 2012

To the Shareholders of O2Micro International Limited:

You are cordially invited to attend the Annual General Meeting of Shareholders of O2Micro International Limited (the “Company”) on Friday, June 22, 2012 (the “Annual General Meeting”), at the offices of Maples and Calder, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, at 2:00 p.m., local time. A Notice of the Annual General Meeting, a Proxy (or a Voting Instruction Card if you are a holder of American Depositary Shares (“ADSs”)) and a Proxy Statement containing information about the matters to be voted upon at the Annual General Meeting are enclosed.

All registered holders of ordinary shares (“Ordinary Shares” or “Shares”) as of the close of business on Tuesday, May 8, 2012 (the “Record Date”), will be entitled to vote at the Annual General Meeting on the basis of one vote for each Ordinary Share held. All registered holders of ADSs as of the Record Date shall be entitled to instruct The Bank of New York Mellon, as depositary for the Company’s ADS program, how to vote the Ordinary Shares underlying such Holder’s ADSs, subject to and in accordance with the provisions of the deposit agreement which governs the Company’s ADS program. A summary of those provisions is included in the attached Proxy Statement.

A record of the Company’s activities for the fiscal year ended December 31, 2011, is included in our annual report to the Shareholders enclosed with this letter (the “Report to Shareholders”) and will be included in the Annual Report on Form 20-F to be filed with the Securities and Exchange Commission prior to the Annual General Meeting (the “Annual Report”). Upon written request to the Secretary of the Company, the Company will provide, without charge, to each person solicited a copy of the Annual Report, including the financial statements and report of independent registered public accounting firm filed therewith. The Annual Report may also be read and copied at the SEC's Public Reference Room at Judiciary Plaza, 100 F Street, N.E. Fifth Street, N.E., Washington, D.C. 20549, and at the regional offices of the SEC located at 3 World Financial Center, Suite 400, New York, New York 10281, and 175 W. Jackson Blvd., Suite 900, Chicago, Illinois 60604, and is also available to the public from the SEC's website at http://www.sec.gov. Copies of the Annual Report will also be available at the Annual General Meeting.

Whether or not you plan to attend the Annual General Meeting, the Company requests that you please exercise your voting rights by completing and returning your Proxy or ADS Voting Instruction Card, as applicable, promptly in the enclosed self-addressed stamped envelope. If you are a registered holder of Ordinary Shares, by attending the Annual General Meeting and voting in person, your Proxy will not be used.

Sincerely,

Sterling Du

Director, Chief Executive Officer and Chairman of the Board

O2MICRO INTERNATIONAL LIMITED

(Incorporated in the Cayman Islands with limited liability)

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

TO BE HELD ON FRIDAY, JUNE 22, 2012

O2Micro International Limited

Grand Pavilion Commercial Centre, West Bay Road

P.O. Box 32331 SMB, George Town

Grand Cayman, Cayman Islands

Executive Directors

Sterling Du

Chuan Chiung “Perry” Kuo

James Elvin Keim

Independent Non-Executive Directors

Michael Austin

Lawrence Lai-Fu Lin

Ji Liu

Teik Seng Tan

Shoji Akutsu

Dinghuan Shi

To the Holders of Ordinary Shares and American Depositary Shares:

The Annual General Meeting of Shareholders of O2Micro International Limited (the “Company”), a Cayman Islands company, will be held on Friday, June 22, 2012, at the offices of Maples and Calder, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, at 2:00 p.m., local time, at which meeting the following matters will be put to the vote of the Shareholders:

PROPOSAL NO. 1.a.

That James Keim be elected as a Class II Director to hold office until the Annual General Meeting of Shareholders to be held in 2015 and until his successor is elected and duly qualified, or until his earlier resignation or removal.

PROPOSAL NO. 1.b.

That Lawrence Lai-Fu Lin be elected as a Class II Director to hold office until the Annual General Meeting of Shareholders to be held in 2015 and until his successor is elected and duly qualified, or until his earlier resignation or removal.

PROPOSAL NO. 1.c.

That Ji Liu be elected as a Class II Director to hold office until the Annual General Meeting of Shareholders to be held in 2015 and until his successor is elected and duly qualified, or until his earlier resignation or removal.

PROPOSAL NO. 2

That the Company’s 2005 Share Option Plan (as amended by shareholders on or about May 30, 2009) (the “Option Plan”) be amended to increase the number of Shares reserved for issuance under the Option Plan by fifty million (50,000,000) additional Shares, raising the total reserved amount from one hundred seventy five million (175,000,000) Shares to two hundred twenty five million (225,000,000) Shares.

PROPOSAL NO. 3

That the Company’s 2005 Share Incentive Plan (as amended by shareholders on or about May 30, 2009) (the “Incentive Plan”) be amended to increase the number of Shares reserved for issuance under the Incentive Plan by sixty two million, five hundred thousand (62,500,000) additional Shares, raising the total reserved amount from one hundred twenty five million (125,000,000) Shares to one hundred eighty seven million, five hundred thousand (187,500,000) Shares.

PROPOSAL NO. 4

That the Company’s 2009 Employee Stock Purchase Plan (the “ESPP”) be amended to increase the number of Shares reserved for issuance under the ESPP by fifteen million (15,000,000) additional Shares, raising the total reserved amount from twenty five million (25,000,000) Shares to forty million (40,000,000) Shares.

PROPOSAL NO. 5

That the Company’s financial statements and the auditors’ report for the fiscal year ended December 31, 2011 be approved and adopted.

PROPOSAL NO. 6

That the appointment of Deloitte & Touche as independent auditors for the fiscal year ending December 31, 2012 be approved and ratified.

The Board of Directors has fixed the close of business May 8, 2012, as the record date for the determination of Shareholders entitled to notice of and to vote at the Annual General Meeting and any postponement or adjournment thereof. Accordingly, only holders of record of Ordinary Shares or American Depository Shares of the Company at the close of business on such date shall be entitled to vote at the Annual General Meeting or any adjournment thereof.

We ask that you vote, date, sign and return the enclosed Proxy (or the enclosed Voting Instruction Card if you hold American Depositary Shares) in the self-addressed stamped envelope. If you are a registered holder of Ordinary Shares, you may revoke your Proxy and vote in person if you later decide to attend in person.

By Order of the Board of Directors

Sterling Du

Director, Chief Executive Officer and Chairman of the Board

O2MICRO INTERNATIONAL LIMITED

(Incorporated in the Cayman Islands with limited liability)

(the “Company”)

O2Micro International Limited

Grand Pavilion Commercial Centre, West Bay Road

P.O. Box 32331 SMB, George Town

Grand Cayman, Cayman Islands

PROXY STATEMENT

GENERAL INFORMATION

This Proxy Statement and the accompanying Proxy, if you hold Ordinary Shares, or Voting Instruction Card if you hold American Depository Shares (“ADSs”), are being mailed to shareholders of the Company (“Shareholders”) in connection with the solicitation of proxies by the Board of Directors (the “Board”) of the Company for the 2012 Annual General Meeting of the Company (the “Annual General Meeting”). The Company’s Annual Report for the fiscal year ended December 31, 2011, which is not part of this Proxy Statement, will be filed separately with the Securities and Exchange Commission (on Form 20-F).

Voting By Registered Holders of Ordinary Shares

When your Proxy is returned properly executed, the Ordinary Shares it represents will be voted in accordance with your specifications. You have three choices as to your vote on each of the items described in this Proxy Statement that are to be voted upon at the Annual General Meeting. You may vote “for” or “against” each item or “abstain” from voting by marking the appropriate box.

If you sign and return your Proxy but do not specify any choices, you will thereby confer discretionary authority for your Ordinary Shares to be voted as recommended by the Board. The Proxy also confers discretionary authority on the individuals named therein to vote on any variations to the proposed resolutions.

Whether or not you plan to attend the Annual General Meeting, you can be assured that your Ordinary Shares are voted by completing, signing, dating and returning the enclosed Proxy to the Company’s share registrar at Maples Fund Services (Asia) Limited, 25th Floor, 100 Queen's Road Central, Hong Kong, not less than 48 hours before the time appointed for the Annual General Meeting. You may revoke your Proxy at any time before it is exercised by giving written notice thereof to the Secretary of the Company, by submitting a subsequently dated Proxy, by attending the Annual General Meeting and withdrawing the Proxy, or by voting in person at the Annual General Meeting.

Each holder of the Ordinary Shares in the capital of the Company in issue, and recorded in the Register of Members of the Company at the close of business on Tuesday, May 8, 2012, is entitled to one vote on a show of hands and, on a poll, to one vote for each Ordinary Share so held at the Annual General Meeting, which includes The Bank of New York Mellon which is the registered holder of all Ordinary Shares deposited into the Company’s ADS program. See the section entitled “Voting by Holders of ADSs” below. All such Ordinary Shares entitled to vote at the Annual General Meeting are referred to herein as “Record Shares.” The presence in person or by proxy of Shareholders holding a majority of the Record Shares will constitute a quorum for the transaction of business at the Annual General Meeting. Resolutions put to the vote at the Annual General Meeting will be decided by a show of hands unless a poll is, before or on the declaration of the result of the show of hands, demanded by the Chairman of the Annual General Meeting or any Shareholder present in person or by proxy. Every holder of a record Share present in person or by proxy is entitled to one vote on a show of hands and, on a poll, to one vote for each Record Share held.

If two or more persons are jointly registered as holders of an Ordinary Share then in voting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of other holders of the Ordinary Share and, for this purpose seniority, shall be determined by the order in which the names stand on the register of the members.

Voting by Holders of ADSs

The Bank of New York Mellon, as depositary of the ADSs, has advised us that it intends to mail to all owners of ADSs this Proxy Statement, the accompanying Notice of Annual General Meeting and an ADS Voting Instruction Card. Upon the written request of an owner of record of ADSs, The Bank of New York Mellon will endeavor, to the extent practicable, to vote or cause to be voted the amount of Shares represented by the ADSs, evidenced by American Depositary Receipts related to those ADSs, in accordance with the instructions set forth in such request. The Bank of New York Mellon has advised us that it will not vote or attempt to exercise the right to vote other than in accordance with those instructions. As the holder of record for all the Ordinary Shares represented by the ADSs, only The Bank of New York Mellon may vote those Shares at the Annual General Meeting.

The Bank of New York Mellon and its agents are not responsible if they fail to carry out your voting instructions or for the manner in which they carry out your voting instructions. This means that if the Ordinary Shares underlying your ADSs are not able to be voted at the Annual General Meeting, there may be nothing you can do.

If (i) the enclosed ADS Voting Instruction Card is signed but is missing voting instructions, (ii) the enclosed ADS Voting Instruction Card is improperly completed or (iii) no ADS Voting Instruction Card is received by The Bank of New York Mellon from a holder of ADSs by June 14, 2012, at 5:00 p.m., New York time (the “ADS Voting Deadline”), The Bank of New York Mellon will deem such holder of ADSs to have instructed it to give a proxy to the Chairman of the Annual General Meeting to vote in favor of each proposal recommended by the Board and against each proposal opposed by the Board. Holders of ADSs can only change their instructions to The Bank of New York Mellon by providing a new ADS Voting Instruction Card to The Bank of New York Mellon prior to the ADS Voting Deadline. ADS holders cannot vote or change the instructions previously delivered to The Bank of New York Mellon in an ADS Voting Instruction Card by attending the Annual General Meeting in person.

Other Shareholder Matters

Your attention is also drawn to Articles 93 and 94 of the Articles of Association of the Company in relation to the requirements applicable to any Shareholder who wishes to propose additional business at the Annual General Meeting not set out in the Notice of the Annual General Meeting, including in relation to the election of the Directors. For business to be properly brought before an annual general meeting by a Shareholder, a shareholder notice addressed to the Secretary of the Company must have been delivered to or mailed and received at the principal executive offices of the Company not less than 45 days nor more than 75 days prior to the date on which the Company first mailed proxy materials for the previous year’s annual general meeting. Such notice to the Secretary must set forth as to each matter the Shareholder proposes to bring before the annual general meeting (i) a brief description of the business desired to be brought before the annual general meeting and the reasons for conducting such business at the annual general meeting, (ii) the name and record address of the Shareholder proposing such business, (iii) the class and number of shares of the Company which are beneficially owned by the Shareholder, and (iv) any material interest of the Shareholder in such business. In the case of nominations of persons for election to the Board, the notice must set forth, in addition, (a) as to each person whom the Shareholder proposes to nominate for election or re-election as a Director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class and number of shares of the Company which are beneficially owned by the person, and (iv) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of Directors pursuant to Rule 14a under the United States Securities Exchange Act of 1934, as amended, and (b) as to the Shareholder giving the notice, (i) the name and record address of the Shareholder, and (ii) the class and number of shares of the Company which are beneficially owned by the Shareholder. The Company may require any proposed nominee to furnish such other information as may reasonably be required by the Company to determine the eligibility of such proposed nominee to serve as a Director of the Company. No person shall be eligible for election as a Director of the Company unless nominated in accordance with these procedures. The foregoing requirements shall apply mutatis mutandis to holders of ADSs which wish to submit proposals for consideration at a general meeting.

Under Article 87 of the Articles of Association of the Company, a Shareholder is entitled to cumulate votes (i.e., cast for any candidate a number of votes greater than the number of votes which such Shareholder normally is entitled to cast) if the candidates’ names have been placed in nomination prior to commencement of the voting and the Shareholder has given notice prior to commencement of the voting of the Shareholder’s intention to cumulate votes. If any Shareholder has given such notice, then every Shareholder entitled to vote may cumulate votes for candidates in nomination either (i) by giving one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the Shareholder’s Shares are normally entitled to, or (ii) by distributing the Shareholder’s votes on the same principle among any or all of the candidates, as the Shareholder thinks fit. The candidates receiving the highest number of affirmative votes, up to the number of directors to be elected, shall be elected; votes against any candidate and votes withheld shall have no legal effect. Each holder of ADSs may instruct The Bank of New York Mellon to vote the Ordinary Shares underlying its ADSs on a cumulative basis as described above.

BOARD OF DIRECTORS

The Board is responsible for establishing broad corporate policies and for overseeing the overall performance of the Company. The Board reviews significant developments affecting the Company and acts on other matters requiring its approval.

The current Board comprises Sterling Du, Chuan Chiung “Perry” Kuo, James Elvin Keim (executive directors) and Michael Austin, Lawrence Lai-Fu Lin, Teik Seng Tan, Shoji Akutsu, Dinghuan Shi, and Ji Liu (independent non-executive directors).

The current standing committees of the Board are the Audit Committee, the Compensation Committee and the Nominating Committee.

The Audit Committee is established by the Board primarily for the purpose of overseeing the accounting and financial reporting processes of the Company and audits of the financial statements of the Company. Its responsibilities include (1) the appointment, retention, compensation and oversight of the work of the Company’s independent auditors, and for review of its qualifications; (2) review of the Company’s annual financial statement, earning releases and accounting practices and procedures; and (3) review of the Company’s system of internal controls. The Audit Committee also maintains procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal controls, or auditing matters and for the confidential submission by employees of the Company of concerns regarding accounting or auditing matters. The Audit Committee is currently comprised of three of the Company’s directors, Shoji Akutsu, Teik Seng Tan (Chairman) and Lawrence Lai-Fu Lin. Mr. Lin is seeking re-election as a Class II Director at the 2012 Annual General Meeting.

The Compensation Committee (i) establishes remuneration levels of the Company's officers, (ii) performs the functions that are provided under the Company's employee benefit programs and (iii) administers the Company's Stock Incentive Plans. The Compensation Committee is currently comprised of two of the Company’s directors, Lawrence Lai-Fu Lin and Michael Austin. Mr. Lin is seeking re-election as a Class II Director at the 2012 Annual General Meeting, and he currently serves as Chairman of the Compensation Committee.

The Nominating Committee assists the Board in selecting nominees for election to the Board and makes recommendations to the Board from time to time, or whenever it shall be called upon to do so, regarding nominees for the Board. The Nominating Committee is currently comprised of two of the Company’s directors, Michael Austin (Chairman) and Dinghuan Shi.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee is directly responsible for the oversight of the Company’s accounting and financial reporting processes and audits of the financial statements of the Company. It is also responsible for the review of the Company’s internal system of controls. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements for the year ended December 31, 2011, with management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.

The Audit Committee reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards. In addition, the Audit Committee has carried out discussions with the independent auditors independently from management and the Company. The independent auditors have provided the Audit Committee with the letter required by the Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees,” and the Audit Committee has engaged in dialogue with the independent auditors regarding their independence.

The Audit Committee meets with the independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. The Audit Committee held four meetings in 2011.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board has approved) that the audited financial statements for the year ended December 31, 2011 be included in the Report to Shareholders and the Form 20-F for filing with the Securities and Exchange Commission. The Audit Committee recommended, subject to shareholders’ approval, the appointment of Deloitte & Touche as the Company’s independent auditors for the fiscal year ending December 31, 2012.

Teik Seng Tan, Audit Committee Chair

Shoji Akutsu, Audit Committee Member

Lawrence Lai-Fu Lin, Audit Committee Member

April 25, 2012

PROPOSALS NOS. 1a. – c.: RE-ELECTION OF DIRECTORS

Article 116 of the Company’s Articles of Association provides that, at the Company’s first annual general meeting after becoming eligible to have a classified board, the Board will be divided into three classes, designated Class I, Class II, and Class III, as nearly equal in number as the then total number of directors permits. Class I directors will be elected for a one-year term, Class II directors for a two-year term and Class III directors for a three-year term. At each subsequent annual general meeting, successors to the class of directors whose terms expire at that annual general meeting will be elected for a three-year term. If the number of directors is changed, any increase or decrease will be apportioned among the classes so as to maintain the number of directors in each class as nearly as possible, and any additional directors of any class elected to fill a vacancy resulting from an increase in that class will hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director.

At the 2012 Annual General Meeting, three (3) existing Class II Directors, James Keim, Lawrence Lai-Fu Lin and Ji Liu, are proposed to be elected for a three-year term until the Annual General Meeting of Shareholders to be held in 2015 and until their respective successors are elected and duly qualified, or until such director’s earlier resignation or removal. A brief summary of each nominee’s principal occupation, business affiliations and other information follows:

James Keim has served as a director since March 1999 and as Head of Marketing and Sales since December 2001 and a Class II director since June 2001. He also served as our chief operating officer from June 1998 to June 2001. From March 1995 to June 1998, Mr. Keim was a principal in Global Marketing Associates, an international consulting firm. Prior to March 1995, he had been vice president of sales at Alliance Semiconductor Corporation, vice president of marketing at Performance Semiconductor Corporation and worldwide linear marketing manager at Fairchild Semiconductor Corporation. Mr. Keim received a B.S. in engineering from Iowa State University, an M.S. in electrical engineering and an M.B.A. from the University of Illinois.

Lawrence Lai-Fu Lin has served as a Class II Director since June 2003, and is a member of the audit committee and chairman of the compensation committee. He is a Certified Public Accountant in Taiwan. Since 1990, Mr. Lin has been a partner of UHY L&C Company, Certified Public Accountants, which is an independent member firm of Urbach Hacker Young International. Mr. Lin was a director of Urbach Hacker Young International from October 1994 to October 1998. Prior to UHY L&C Company, he was a partner at T N Soong & Co. Mr. Lin serves as director and chairman of the audit committee of Yageo Corporation, and director of Arima Communications Corporation, all of which are Taiwan listed public companies. He graduated from Taipei Vocational Commercial School in 1969.

Ji Liu has served as a Class II Director since June 2007. Mr. Liu has been an Honorary President of the China Europe International Business School since 2005. He has been the Chairman of China Europe International Business School Education Development Foundation since 2005. From 1999 to 2004, Mr. Liu was Executive President and President of the China Europe International Business School. From 1993 to 1999, Mr. Liu was a Research Fellow, Member of the Academic Board, Graduate Supervisor and Deputy Chairman of the Chinese Academy of Social Sciences. He received a B.S. in power mechanical engineering from Tsinghua University in China.

All nominees have consented to be named in this proxy statement and to serve on the Company’s board, if elected. In the event that any nominee should not be available, the persons named in the proxy will vote for the other nominees and may vote for a substitute for the unavailable nominee.

THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF JAMES KEIM, LAWRENCE LAI-FU LIN AND JI LIU AS CLASS II DIRECTORS TO SERVE A THREE-YEAR TERM UNTIL THE ANNUAL GENERAL MEETING OF SHAREHOLDERS TO BE HELD IN 2015 AND UNTIL THEIR RESPECTIVE SUCCESSORS ARE ELECTED AND DULY QUALIFIED, OR UNTIL SUCH DIRECTOR’S EARLIER RESIGNATION OR REMOVAL. UNLESS DIRECTED TO THE CONTRARY, THE ORDINARY SHARES REPRESENTED BY VALID PROXIES WILL BE VOTED FOR THE ELECTION OF SAID NOMINEES. ORDINARY SHARES UNDERLYING ADSs WILL BE VOTED AS DESCRIBED UNDER THE SECTION “VOTING BY HOLDERS OF ADSs” ABOVE.

PROPOSAL NO. 2: ORDINARY RESOLUTION – 2005 SHARE OPTION PLAN

The Shareholders are being asked to approve, adopt and ratify certain an amendment to the Company’s 2005 Share Option Plan (as amended by shareholders on or about May 30, 2009) (the “Option Plan”) to increase the number of Shares reserved for issuance under the Option Plan by fifty million (50,000,000) additional Shares, raising the total reserved amount from one hundred seventy five million (175,000,000) Shares to two hundred twenty five million (225,000,000) shares.

A general description of the Option Plan is set forth below. This description is qualified in its entirety by the terms of the Option Plan incorporating the proposed amendment, a copy of which is available for inspection by Shareholders and ADS holders the Company’s office at 3118 Patrick Henry Drive, Santa Clara CA 95094.

The total number of Shares currently reserved for issuance under the Option Plan is 175,000,000. The Shareholders are being asked to approve, adopt and ratify an amendment to the Option Plan to increase this number to 225,000,000 Shares. The prior limitation on the aggregate number of Shares which may be issued under the Option Plan and all other share incentive plans of the Company to a certain percentage of the number of Shares then outstanding was recently eliminated by the Board. The prior limitation on the number of Shares that may be issued upon the exercise of all outstanding options under Option Plan and any other share incentive plan to a certain percentage of the number of issued and outstanding Shares at any time was also recently eliminated by the Board.

As of March 31, 2012, a total of 143,060,250 options had been granted under the Option Plan and 136,174,400 remained outstanding, and an aggregate of 31,939,750 Shares were available for issuance under the Option Plan, representing approximately 1.92% of our issued share capital.

If this proposal is approved by ordinary resolution of our Shareholders, the amendment will become effective at the Company’s 2012 Annual General Meeting.

The Option Plan provides solely for the grant of stock options. Stock options granted under the Option Plan are either incentive share options under the provisions of Section 422 of the U.S. Internal Revenue Code or non-qualified share options. Incentive share options are granted only to employees. Non-qualified share options are granted to employees, directors and consultants.

Our Board, or a committee designated by the Board, referred to as the “plan administrator,” administers the Option Plan, including selecting the participants, determining the number of Shares to be subject to each option, determining the exercise price of each option and determining the vesting and exercise periods of each option.

The exercise price of all options granted under the Option Plan must be at least equal to 100% of the greater of (1) the closing price of the Shares on the principal exchange or system on which the Shares are listed on the date of grant (which must be a trading day) and (2) the average closing price of the Shares on the principal exchange or system on which the Shares are listed for the five (5) trading days immediately preceding the date of grant. If, however, incentive share options are granted to an employee who owns Shares possessing more than 10% of the voting power of all classes of our Shares or the Shares of any parent or subsidiary of us, the exercise price of any incentive share option granted must equal at least 110% of the greater of (1) the closing price of the Shares on the principal exchange or system on which the Shares are listed on the date of grant (which must be a trading day); and (2) the average closing price of the Shares on the principal exchange or system on which the Shares are listed for the five trading days immediately preceding the date of grant, and the maximum term of these incentive share options must not exceed five years. The maximum term of options must not exceed ten years.

Under the Option Plan, incentive share options may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised during the lifetime of the participant only by the participant. Non-qualified share options shall be transferable by will or by the laws of descent or distribution and to the extent provided in the option agreement. The Option Plan permits the designation of beneficiaries by holders of options.

In the event that a participant in the Option Plan terminates service or his or her service is terminated by us without cause, any options which have become exercisable prior to the time of termination will remain exercisable for three months from the date of termination (unless a shorter or longer period of time is determined by the plan administrator). In the event that a participant in the Option Plan is terminated by us for cause, any options which have become exercisable prior to the time of termination will terminate immediately. If termination was caused by death or disability, any options which have become exercisable prior to the time of termination will remain exercisable for twelve months from the date of termination (unless a shorter or longer period of time is determined by the plan administrator). In no event may a participant exercise the option after the expiration date of the option.

In the event of a corporate transaction where the acquirer does not assume options granted under the Option Plan, the options shall terminate upon the consummation of the corporate transaction. Under the Option Plan, a corporate transaction is generally defined as:

·	an acquisition of more than 50% of our Shares by any individual or entity;

·	a reverse merger in which more than 40% of our Shares are transferred to a person or persons different from those who held our Shares immediately prior to such merger;

·	a sale, transfer or other disposition of all or substantially all of the assets of our Company;

·	a merger or consolidation in which our Company is not the surviving entity; or

·	a complete liquidation or dissolution.

Unless terminated sooner, the Option Plan will automatically terminate in 2015. Our Board has the authority to amend or terminate the Option Plan. With respect to any such amendment, we will obtain the approval of the Shareholders to the extent, in such a manner and to such a degree as is necessary to comply with applicable provisions of the corporate and securities laws of the Cayman Islands, the U.S. Internal Revenue Code, the rules of the NASDAQ Stock Market, the rules of any other applicable stock exchange or national market system, and the rules of any jurisdiction applicable to options granted to residents therein.

THE BOARD RECOMMENDS THAT YOU VOTE FOR THE APPROVAL, ADOPTION AND RATIFICATION OF THE AMENDMENTS TO THE 2005 SHARE OPTION PLAN. UNLESS DIRECTED TO THE CONTRARY, THE ORDINARY SHARES REPRESENTED BY VALID PROXIES WILL BE VOTED FOR THE APPROVAL, DOPTION AND RATIFICATION OF THE AMENDMENTS TO THE 2005 SHARE OPTION PLAN. ORDINARY SHARES UNDERLYING ADSs WILL BE VOTED AS DESCRIBED UNDER THE SECTION “VOTING BY HOLDERS OF ADSs” ABOVE.

PROPOSAL NO. 3: ORDINARY RESOLUTION – 2005 SHARE INCENTIVE PLAN.

The Shareholders are being asked to approve, adopt and ratify an amendment to the Company’s 2005 Share Incentive Plan (as amended by shareholders on or about May 30, 2009) (the “Incentive Plan”) to increase in the number of Shares reserved for issuance under the Incentive Plan by sixty two million, five hundred thousand (62,500,000) additional Shares, raising the total reserved amount from one hundred twenty five million (125,000,000) Shares to one hundred eighty seven million, five hundred thousand (187,500,000) Shares.

A general description of the Incentive Plan is set forth below. This description is qualified in its entirety by the terms of the Incentive Plan incorporating the proposed amendment, a copy of which is available for inspection by Shareholders and ADS holders at the Company’s office at 3118 Patrick Henry Drive, Santa Clara CA 95094.

The total number of Shares currently reserved for issuance under the Incentive Plan is 175,000,000, subject to adjustment for a share split, ADS recalculation, or any future share dividend or other similar change in our shares or our capital structure. The Shareholders are being asked to approve, adopt and ratify an amendment to the Incentive Plan to increase this number to 187,500,000 Shares.

As of March 31, 2012, issuances/rights in respect of 87,262,350 Shares had been granted under the Incentive Plan and issuances/rights in respect of 57,316,900 Shares had been granted and had vested in the grantees, and an aggregate of 37,737,650 Shares were available for issuance under the Incentive Plan, representing approximately 2.27% of our issued share capital.

If this proposal is approved by ordinary resolution of our Shareholders, the amendment will become effective at the Company’s 2012 Annual General Meeting.

The Incentive Plan provides for the grant of restricted Shares, restricted Share units, Share appreciation rights and dividend equivalent rights, collectively referred to as “awards.” Awards may be granted to employees, Directors and consultants.

Our Board or a committee designated by our Board, referred to as the “plan administrator,” is responsible for administering the Incentive Plan, including selecting the participants, determining the number of Shares to be subject to each award, determining the purchase price (if any) of each award and determining the vesting and exercise periods of each award. The base appreciation amount of share appreciation rights granted under the Incentive Plan must be at least equal to 100% of the closing price of the Shares on the principal exchange or system on which the Shares are listed on the date of grant. The plan administrator determines the purchase price of all other awards granted under the Incentive Plan. The maximum term of all awards must not exceed ten years. Awards are transferable by will or by the laws of descent or distribution. The Incentive Plan permits the designation of beneficiaries by holders of awards. In the event of a corporate transaction where the acquirer does not assume awards granted under the Incentive Plan, the awards shall terminate upon the consummation of the corporate transaction. Under the Incentive Plan, a corporate transaction has the same meaning as under the Option Plan.

Unless terminated sooner, the Incentive Plan will automatically terminate in 2015. Our Board has the authority to amend or terminate our Incentive Plan. With respect to any such amendment, we will obtain the approval of the Shareholders to the extent, in such a manner and to such a degree as is necessary to comply with applicable provisions of the corporate and securities laws of the Cayman Islands, the U.S. Internal Revenue Code, the rules of the NASDAQ Stock Market, the rules of any other applicable stock exchange or national market system, and the rules of any jurisdiction applicable to awards granted to residents therein.

THE BOARD RECOMMENDS THAT YOU VOTE FOR THE APPROVAL, ADOPTION AND RATIFICATION OF THE AMENDMENTS TO THE 2005 SHARE INCENTIVE PLAN. UNLESS DIRECTED TO THE CONTRARY, THE ORDINARY SHARES REPRESENTED BY VALID PROXIES WILL BE VOTED FOR THE APPROVAL, ADOPTION AND RATIFICATION OF THE AMENDMENTS TO THE 2005 SHARE INCENTIVE PLAN. ORDINARY SHARES UNDERLYING ADSs WILL BE VOTED AS DESCRIBED UNDER THE SECTION “VOTING BY HOLDERS OF ADSs” ABOVE.

PROPOSAL NO. 4: ORDINARY RESOLUTION – 2009 EMPLOYEE STOCK PURCHASE PLAN

The Shareholders are being asked to approve, adopt and ratify an amendment to the Company’s 2009 Employee Stock Purchase Plan (the “ESPP”) to increase in the number of Shares reserved for issuance under the ESPP by fifteen million (15,000,000) additional Shares, raising the total reserved amount from twenty five million (25,000,000) Shares to forty million (40,000,000) Shares.

A general description of the ESPP is set forth below. This description is qualified in its entirety by the terms of the ESPP incorporating the proposed amendment, a copy of which is available for inspection by Shareholders and ADS holders at the Company’s office at 3118 Patrick Henry Drive, Santa Clara CA 95094.

The total number of Shares currently reserved for issuance under the ESPP is 25,000,000, subject to adjustment for a share split, ADS recalculation, or any future share dividend or other similar change in our shares or our capital structure. The Shareholders are being asked to approve, adopt and ratify an amendment to the ESPP to increase this number to 40,000,000 Shares. The prior limitation on the aggregate number of Shares which may be issued under the ESPP and all other share incentive plans of the Company to a certain percentage of the number of Shares then outstanding was recently eliminated by the Board. The prior limitation on the number of Shares that may be issued upon the exercise of all outstanding options under the ESPP and any other share incentive plan to a certain percentage of the number of issued and outstanding Shares at any time was also recently eliminated by the Board.

As of March 31, 2012, 14,398,800 Shares had been purchased under the ESPP, and an aggregate of 10,601,200 Shares were available for purchase under the ESPP, representing approximately 0.64% of our issued share capital.

If this proposal is approved by ordinary resolution of our Shareholders, the amendment will become effective at the Company’s 2012 Annual General Meeting.

The ESPP provides the opportunity for the purchase of Shares at a 10% discount of the average price during a particular period, collectively referred to as “awards.” Awards may be granted to employees, Directors and consultants.

Our Board, or a committee designated by our Board, referred to as the “plan administrator,” is responsible for administering the ESPP, including selecting the participants, determining the number of Shares to be subject to each award, determining the purchase price (if any) of each award and determining the vesting and exercise periods of each award.

The base appreciation amount of share appreciation rights granted under the ESPP must be at least equal to 90% of the Fair Market Value of the Shares on the principal exchange or system on which the Shares are listed on the date of grant. The plan administrator determines the purchase price of all other awards granted under the ESPP. The maximum term of all awards must not exceed ten years. Awards are transferable by will or by the laws of descent or distribution. The ESPP permits the designation of beneficiaries by holders of awards. In the event of a corporate transaction where the acquirer does not assume awards granted under the ESPP, the awards shall terminate upon the consummation of the corporate transaction. Under the ESPP, a corporate transaction is defined as any of the following transactions:

·	a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the jurisdiction in which the Company is incorporated;

·	the sale, transfer or other disposition of all or substantially all of the assets of the Company (including the capital stock of the Company’s subsidiary corporations) in connection with complete liquidation or dissolution of the Company;

any reverse merger in which the Company is the surviving entity, but in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger; or

acquisition by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities, but excluding any such transaction that the Administrator determines shall not be a corporate transaction.

Unless terminated sooner, the ESPP will automatically terminate in 2019. Our Board has the authority to amend or terminate the ESPP. With respect to any such amendment, we will obtain the approval of the Shareholders to the extent, in such a manner and to such a degree as is necessary to comply with applicable provisions of the corporate and securities laws of the Cayman Islands, the U.S. Internal Revenue Code, the rules of the NASDAQ Stock Market, the rules of any other applicable stock exchange or national market system, and the rules of any jurisdiction applicable to participation granted to residents therein.

THE BOARD RECOMMENDS THAT YOU VOTE FOR THE APPROVAL, ADOPTION AND RATIFICATION OF THE AMENDMENTS TO 2009 EMPLOYEE STOCK PURCHASE PLAN. UNLESS DIRECTED TO THE CONTRARY, THE ORDINARY SHARES REPRESENTED BY VALID PROXIES WILL BE VOTED FOR THE APPROVAL, ADOPTION AND RATIFICATION OF THE AMENDMENTS TO THE 2009 EMPLOYEE STOCK PURCHASE PLAN. ORDINARY SHARES UNDERLYING ADSs WILL BE VOTED AS DESCRIBED UNDER THE SECTION “VOTING BY HOLDERS OF ADSs” ABOVE.

PROPOSAL NO. 5: APPROVAL AND ADOPTION OF THE FINANCIAL STATEMENTS AND THE AUDITORS’ REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011

The approval and adoption by the Shareholders of the financial statements and the auditors’ report for the fiscal year ended December 31, 2011 are being solicited. The financial statements and the auditors’ report for the fiscal ended December 31, 2011 appear in the Report to Shareholders.

THE BOARD RECOMMENDS THAT YOU VOTE FOR THE APPROVAL AND ADOPTION OF THE FINANCIAL STATEMENTS AND AUDITORS’ REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011. UNLESS DIRECTED TO THE CONTRARY, THE ORDINARY SHARES REPRESENTED BY VALID PROXIES WILL BE VOTED FOR THE APPROVAL AND ADOPTION OF THE FINANCIAL STATEMENTS AND AUDITORS’ REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011. ORDINARY SHARES UNDERLYING ADSs WILL BE VOTED AS DESCRIBED UNDER THE SECTION “VOTING BY HOLDERS OF ADSs” ABOVE.

PROPOSAL NO. 6: APPROVAL AND RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS

The Audit Committee of the Board has appointed Deloitte & Touche as independent auditors of the Company for the fiscal year ending December 31, 2012, subject to approval and ratification by the Shareholders.

If the Shareholders do not approve and ratify the appointment of Deloitte & Touche, the selection of other independent auditors will be considered by the Audit Committee and the Board.

THE BOARD RECOMMENDS THAT YOU VOTE FOR THE APPROVAL AND RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2011. UNLESS DIRECTED TO THE CONTRARY, THE ORDINARY SHARES REPRESENTED BY VALID PROXIES WILL BE VOTED FOR THE APPROVAL AND RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE AS THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 2012. ORDINARY SHARES UNDERLYING ADSs WILL BE VOTED AS DESCRIBED UNDER THE SECTION “VOTING BY HOLDERS OF ADSs” ABOVE.

GENERAL

At the date of this Proxy Statement, the Board of Directors has no knowledge of any business which has been presented for consideration at the Annual General Meeting other than that described above.

Present and former officers, directors and other employees of the Company may solicit proxies and ADS voting instructions by telephone, telecopy, telegram or mail, or by meetings with Shareholders or their representatives. The Company will reimburse brokers, ADS depository, banks or other custodians, nominees and fiduciaries for their charges and expenses in forwarding proxy materials to beneficial owners. All expenses of solicitation of proxies will be borne by the Company.

By Order of the Board of Directors,

Sterling Du

Chief Executive Officer and Chairman of the Board

Dated: April 25, 2012