Product category:
Power Supply ICs and Controllers
News Release from: ON Semiconductor
Edited by the Electronicstalk Editorial
Team on 07 April 2006
Submicron fab is acquired from LSI Logic
ON Semiconductor is to purchase LSI Logic Corp's Gresham, Oregon, wafer fabrication facility and semiconductor manufacturing equipment for approximately $105 million in cash.
ON Semiconductor subsidiary Semiconductor Components Industries has executed a definitive agreement to purchase LSI Logic Corp's Gresham, Oregon, wafer fabrication facility and certain other semiconductor manufacturing equipment for a total of approximately $105 million in cash The company paid LSI Logic a deposit of $10.5 million concurrently with the execution of the definitive agreement, is currently obligated to pay $79.5 million at closing, and expects to pay the remaining balance within 90 days after closing
This article was originally published on Electronicstalk on 31 Mar 2003 at 8.00am (UK)
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The assets to be purchased include an approximately 34Ha campus with an estimated 47,000m2 of building space of which approximately 9100m2 is clean room.
The 200mm-capable toolset and equipment included in the transaction is currently capable of producing 8in wafers at a rate of 18,000 per month.
Pursuant to the agreement, ON Semiconductor will offer employment to substantially all of the LSI Logic manufacturing employees currently working at the Gresham facility.
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The skilled process development and operational expertise of Gresham's employee base are a critical aspect of the transaction and will help enable ON Semiconductor to produce its own high-volume low-cost high-performance analogue and digital power products down to 0.18um levels - with toolset capabilities down to the 0.13um level in the future.
ON Semiconductor is truly excited to welcome this very capable team.
Longer term, ON Semiconductor believes that the access gained to submicron cell libraries, skilled process development engineers, operational expertise and process development knowhow through this transaction will enable ON Semiconductor to expand its portfolio of high performance analogue and power products.
In connection with this transaction, ON Semiconductor and LSI Logic will enter into several related agreements, including a wafer supply and test agreement, intellectual property licence agreement, transition services agreement and facilities use agreement.
LSI Logic will continue to retain ownership after the closing of its product designs, in-process inventory and external customer receivables and will provide for assembly and final test services, sales, marketing and distribution functions related to its products.
Under the wafer supply and test agreement, LSI Logic will commit to purchase approximately $200 million of wafer supply and certain test services over an initial period of 2 years.
ON Semiconductor will also provide LSI Logic with access to certain wafer supply and certain test services for up to 4 years, under additional terms that will be negotiated after the 2-year commitment period.
It is expected that the wafer supply and test agreement will enable ON Semiconductor to offset much of the fixed costs associated with operating the Gresham facility in the transition period when ON Semiconductor is ramping the production of its own wafers in Gresham.
The agreement will also enable LSI Logic to ensure quality and supply to its customer base.
Through a nonrecurring engineering arrangement with LSI Logic, ON Semiconductor has already begun to run wafers in Gresham and has received its first test wafers from production.
The transaction is expected to be neutral to ON Semiconductor's earnings per share (EPS) in 2006, and be EPS positive in 2007 as the company ramps production of its own products in the facility.
The transaction is also expected to result in a slight reduction (approximately 100 basis points) in the company's 2006 gross margin.
Over the long term, the company believes the purchase of the Gresham wafer facility will have a positive effect on gross margins for the company as it develops a higher mix of high-performance analogue and digital power products.
The transaction is subject to certain closing conditions, including regulatory approval.
Closing of the transaction is expected to occur in approximately 45 days.
The company's payment obligations in connection with the transaction are expected to be satisfied with existing cash balances, cash flow from operations, proceeds from sales of existing assets and/or the proceeds of potential future financings.
"The purchase of the Gresham 8in wafer facility will accelerate our technology roadmap - enabling ON Semiconductor to develop a larger mix of high-performance submicron analogue and digital power products", said Keith Jackson, ON Semiconductor's President and CEO.
"We currently own and operate 4 and 6in wafer fabrication facilities throughout the world and the capabilities of the Gresham 8in facility are consistent with our commitment to our customers to supply state-of-the-art technology in high volumes and at a low cost".
"We expect demand for our submicron high performance products to continue to increase".
"Securing advance manufacturing capabilities, process development knowhow and operational expertise in deep submicron technologies will support our long-term strategic roadmap".
"The Gresham facility purchase provides us with cost-effective advanced manufacturing capabilities in a much shorter time frame and on more favourable terms than expanding our existing fabrication infrastructure".
"These capital expenditures to expand fab capacity were already part of our current 5-year plan, and the asset purchase of the Gresham facility is just an acceleration of what we had already planned to spend", said Donald Colvin, ON Semiconductor's Senior Vice President and CFO.
"This purchase enables us to introduce new products faster and accelerates our internal capability roadmap, while the supply agreement allows us to offset projected fixed costs".
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