Monthly Archives: March 2001

March 12, 2001–Boston, Massachusetts–TA Associates, a leading private equity firm, announced today that Cypress Semiconductor Corp. has completed the acquisition of its portfolio company, International Microcircuits Inc. (IMI), for approximately $125 million.

IMI is a leading supplier of frequency and timing generators and EMI reduction circuits. Its product portfolio–which is largely complementary to Cypress’s–includes programmable clocks, clock distribution products, electromagnetic interference (EMI) suppression devices, and application-specific products. IMI’s EMI-suppression products complement Cypress’s current Peak Reducing EMI Solutions (PREMIS) product portfolio.

“TA Associates, with IMI’s current management team, acquired a majority interest in IMI from its founder in 1997 in a leveraged management buyout. We enjoyed working with IMI’s management team during a period of significant growth for the company,” says Kurt Jaggers, a managing director at TA Associates who served on IMI’s Board of Directors. “This investment represents an example of a successful technology buyout transaction that is a key part of TA’s investment strategy.”

March 12, 2001–Santa Clara, California–IBM Corp. has joined the Extreme Ultra Violet (EUV) LLC industry consortium to support the development of EUV lithography technology. EUV lithography technology is being developed to allow semiconductor manufacturers to etch circuit lines smaller than 0.1-micron, creating future generations of more powerful microprocessors and higher density memory chips. Processors built using EUV technology are expected to reach speeds of up to 10 GHz in 2005 to 2006.

“IBM has over 20 years of experience in developing EUV optics technology and its application to scientific research, and we intend to support EUV’s growing viability as an NGL candidate,” says John Warlaumont, director of silicon technology for IBM. “We are formalizing our relationship with the EUV LLC to help the semiconductor industry further evaluate EUV for use in the production of advanced semiconductors.”

IBM joins the private industry consortium led by Intel Corp., Advanced Micro Devices, Motorola, Micron Technology, and Infineon Technologies AG. These companies have joined forces with the Virtual National Laboratory (comprised of the U.S. Department of Energy’s Lawrence Livermore National Laboratory, Sandia National Laboratories, and E.O. Lawrence Berkeley National Laboratory) to develop EUV lithography technology targeted at increasing computer chip capabilities.

“Six large manufacturers of a wide variety of chips have now committed major resources to the EUV lithography program,” says Sunlin Chou, chairman of the EUV LLC board, and senior vice president and general manager of Intel’s Technology and Manufacturing Group. “IBM’s participation raises our confidence that EUV lithography will succeed both technically and commercially. We look forward to working with equipment and materials suppliers to accelerate the development of the EUV lithography infrastructure.”

The EUV LLC is working directly with Silicon Valley Group Lithography (SVGL) and ASM Lithography to commercialize EUV technology, targeting availability of manufacturing tools in 2005. The EUV LLC has also developed relationships with more than 40 U.S.-based infrastructure companies to ensure that all of the key components can be attained for commercialization.

March 12, 2001–Melville, New York–General Semiconductor, Inc., a leading manufacturer of power management devices, today updated its business outlook for the first quarter. As a result of the continued slowdown in our customers’ markets and excess inventory still in the channels, first quarter revenues are expected to be 14 to 16% below the $119.9 million reported in the previous quarter.

Diluted earnings per share for the first quarter are expected to be in the range of $0.12 to $0.14, before approximately $14 million in one-time charges associated with the restructuring announced on February 7, 2001.

“Our customer base continues to be affected by the broad-based economic slowdown,” says Robert J. Gange, senior vice president and chief financial officer. “As a result, the increase in order rates we projected for late February and early March have not materialized and we now expect first quarter results to be lower than our earlier guidance.”

Given the current market uncertainty and lack of visibility, the company plans to furnish an updated outlook for the second quarter of 2001 and the balance of the year when it releases first quarter earnings on April 19, 2001.

March 12, 2001–Sunnyvale, California–Silicon Storage Technology, Inc. (SST) announced today that revenue, product gross margin,and earnings per share for the first quarter of 2001 will be significantly lower than previously expected, due to the deteriorating economy and inventory corrections that are continuing to constrain demand for technology products.

SST initially experienced a sharp downturn in several of its markets late in the fourth quarter of 2000, as its customers reacted to weakening demand and higher inventories. Market conditions have not improved during the quarter and customers have continued to return product, cancel backlog, or push out shipments. The result to SST is extremely limited visibility for the near-term.

Consequently, SST expects that first quarter revenue will be approximately $75 million to $85 million. The company also said that it is experiencing softness in average selling prices of some of its products, and as a result product gross margins are expected to be approximately 35%. These reductions are expected to result in earnings per share of between $0.05 and $0.10.

SST is continuing its strong focus on the development of new products and the cost reduction of existing products, along with continued expansion of its licensing relationships and securing the wafer foundry capacity with deep submicron geometries. “In spite of the current dismal economic conditions, we are confident of SST’s long-term ability to continue to grow and expand market share,” says Bing Yeh, president and CEO of SST. “As we continue to take steps to manage our expenses, the strength of our balance sheet gives SST the ability to maintain strategic levels of R&D investments. These investments are focused in areas that increase our competitiveness and efficiency, including the development of several high density application-specific memory products and the continued push toward 0.25-micron and 0.18-micron production.”

March 12, 2001–Westlake Village, Callifornia–Diodes Inc. reports that net income for the first quarter of 2001 will be lower than previously expected, and that the company intends to reduce its worldwide workforce by 26%–primarily at the FabTech and Diodes-China manufacturing facilities.

Late in the fourth quarter of 2000, Diodes, and the semiconductor industry as a whole, experienced a sharp inventory correction in these key markets, which has continued in the first quarter of 2001. As a result, Diodes management now expects revenues to be in the range of $24 to $26 million for the first quarter of 2001, as compared with $26.1 million in the fourth quarter of 2000. Net income is anticipated to be in the range of $500,000 to $700,000, as compared with $2.8 million in the previous quarter.

The impact to earnings is largely attributable to reduced capacity utilization of the company’s manufacturing assets and changes in product mix, both of which have had a negative impact on gross margins. Due to market conditions, capacity utilization at Diodes’ FabTech subsidiary has decreased 45%, as compared with the previous year, while Diodes-China’s use has decreased 15%.

“The past few months have been challenging, as the industry was hit with a quick and deep inventory correction,” says Diodes President and CEO C.H. Chen. “The risks of becoming a fully integrated manufacturer are amplified in an industry-wide slowdown because of the fixed costs associated with manufacturing facilities. Management has responded to this cyclical downturn by implementing programs to cut operating costs, including reducing our worldwide workforce by 26%–primarily at the FabTech and Diodes-China manufacturing facilities. We will continue to actively adjust our cost structure as dictated by market conditions, but are pleased that our SG&A expenses for the quarter have decreased to less than 15% of revenues, compared to 16% in 2000.”

Diodes completed its first strategic acquisition when it acquired FabTech Inc. of Kansas City, MO, in the fourth quarter of 2000. The 70,000-sq.-ft. wafer foundry, with its 16,000-sq.-ft. cleanroom, and experienced engineering team contribute to the company’s strategic goal of becoming a vertically integrated manufacturer and supplier of discrete semiconductors.

“It is important to note that we believe we have maintained our market share in our discrete semiconductor products, and we are cautiously optimistic as we are just beginning to enter new markets such as Europe and have expanded our Asian sales force,” says Chen. “Long term, we believe that we will continue to generate value for our shareholders and customers, not just from our expanded Diodes-China manufacturing and FabTech’s foundry assets, but also by the addition of a true technology component to Diodes. It is unfortunate that the market conditions changed just as we started our initiative, but this will not stop us from achieving our goal of becoming a total solution provider. We reiterate that this is a multi-year initiative that will increase our ability to serve our customers’ needs, while establishing Diodes Inc. at the forefront of the next generation of discrete technologies.”

March 12, 2001–Santa Clara, California–Alliance Semiconductor Corp. has reduced its revenue guidance for the fiscal fourth quarter ending March 31, 2001, and now expects that fourth quarter revenues will be approximately 45% to 50% below the $63.8 million reported during the fiscal third quarter ended December 31, 2000.

“We continued to see weak demand and order cancellations during the current quarter for both DRAM and SRAM products due to the slowing economy and build-up in inventories at OEMs,” says Alliance Chairman, President, and CEO N.D. Reddy. “It’s difficult to predict future demand at this time, given the current market environment. As we indicated previously, we have taken steps, starting last quarter, to reduce inventories to meet current and expected future demand and have also taken steps to control expenditures.”

The fourth quarter and fiscal year 2001 earnings release is currently scheduled for April 26, 2001, after the market closes.

March 12, 2001–Shelton, Connecticut–TranSwitch Corp. has announced that due to increased weakness in the telecommunications systems market in North America, as evidenced by recent announcements by major telecom systems vendors, it expects that its first quarter 2001 revenue will be essentially flat compared to fourth quarter 2000 revenue of $51million.

The company is continuing to manage its business according to the business model that has been pursued in recent quarters, including continued investment in R&D. TranSwitch expects first quarter 2001 earnings per share in the range of $0.16-$0.17. Dr. Santanu Das, TranSwitch president and chairman of the Board of Directors, stated, “Our business in Asia and Europe continues to be strong, but we now see increased softness in North America. In light of the recent announcements from the major telecom systems vendors, we no longer have the confidence that our expected turns business will materialize. Further, based on the visibility we now have of second quarter 2001, we expect revenue in second quarter 2001 to be flat compared to first quarter 2001.”

March 12, 2001–Phoenix, Arizona–ON Semiconductor Corp. recently announced that product revenues for the first quarter of 2001 are expected to be down approximately 30% from the fourth quarter of 2000, with an expected loss per share of 13 to 15 cents, excluding restructuring charges, amortization of goodwill, and other intangibles.

Previously, the company had expected a sequential product revenue reduction of 18 to 20% and earnings per share between breakeven and a 3 cent loss. In the fourth quarter of fiscal 2000, the company reported product revenues of $491 million and net income of approximately $21 million, or 12 cents per share, excluding amortization of goodwill and other intangibles.

Commenting on the near-term outlook, Steve Hanson, president and chief executive officer of ON Semiconductor stated, “Overall demand for our products continues to be soft. Customers continue to delay or cancel bookings in order to manage their inventories in line with their incoming business. Consequently, orders for the current quarter are trending below the fourth quarter of 2000. Our customers are unable to give us much visibility as to expected requirements. As a result, we are managing our resources prudently, staying close to our customers for signals of an upturn, and continuing our new product development efforts.”

March 12, 2001–Hsinchu, Taiwan–Taiwan Semiconductor Manufacturing Co. (TSMC) recently announced that net sales for February 2001 totaled NT$11,614 million, representing an increase of approximately 28.8% over February 2000 sales and a decrease of 28.0% from January 2001 sales. The company’s sales revenue for January and February 2001 totaled NT$27,771 million, representing an increase of 51.4% over the corresponding period of 2000.

K. C. Chen, TSMC spokesperson, stated that according to customers’ long-term forecast and their inventory status reports, the global semiconductor market continues to slow for the first quarter of 2001. The company estimated that the sales revenue for the first quarter of 2001 will decrease 26% from the fourth quarter of 2000, about 1% lower than the previous forecast of a 25% decrease. The overall industry cycle is expected to trend upward gradually in the second half of 2001. TSMC is optimistic about the future direction of the foundry industry.

March 12, 2001–Tokyo, Japan–Sony Computer Entertainment Inc. (SCEI), IBM Corp., and Toshiba Corp. today announced plans to collectively invest more than $400 million over the next 5 years to research and develop an advanced chip architecture for a new wave of devices in the emerging broadband era.

The three companies will establish a joint development center within an IBM facility located in Austin, TX. At its peak, the center will be staffed with nearly 300 computer architects and chip designers dedicated to the development project.

Code-named “Cell,” the new microchips will employ the world’s most advanced research technologies and chip-making techniques, including copper wires, silicon-on-insulator (SOI) transistors, and low-k dielectric insulation, with features smaller than 0.10-micron. The expected result is consumer devices that are more powerful than IBM’s Deep Blue supercomputer, able to operate at low power, and access the broadband Internet at ultra high speeds. Cell will be designed to deliver “teraflops” of processing power.

“The processor platform that people have only been able to imagine is now going to become a reality,” says Ken Kutaragi, president and CEO of SCEI. “The new broadband processor that we are going to create will raise the curtain on a new era in high-speed, network-based computing. With built-in broadband connectivity, microprocessors that currently exist as individual islands will be more closely linked, making a network of systems act more as a unified ‘supersystem’. Just as biological cells in the body unite to form complete physical systems, Cell-based electronic products of all types will form the building blocks of larger systems. SCEI, IBM, and Toshiba are mapping out the future of broadband computing.”

All three companies will manufacture the Cell microchips for a variety of consumer applications. IBM reports that it expects to dedicate a considerable portion of its new, state-of-the-art 300mm wafer manufacturing facility in Fishkill, NY, to producing Cell microchips.