Ottawa, Canada – Zarlink Semiconductor announced the sale of its wafer fab in Plymouth, UK, as well as IP and related foundry businesses, to companies controlled by X-FAB Semiconductor Foundries AG of Erfurt, Germany for US$30 million, represented by US$12 million in cash on closing and a secured note of US$18 million repayable over three years.

“This is another important milestone in building a fabless semiconductor design company,” said Patrick J. Brockett, president and CEO, Zarlink Semiconductor. “Coupled with last month’s sale of our foundry in Bromont, Quebec, we are increasingly focusing our engineering, management, and financial resources on speeding the introduction of new communications and ultra low-power medical integrated circuits.”

The Plymouth facility comprises two CMOS wafer fabrication lines for producing digital and mixed-signal communications and medical semiconductors. The plant recently launched a new ultra low-power analog non volatile 0.35-micron CMOS process optimized for low voltage and low power applications.

As part of the sale, the two companies have signed a five-year agreement to ensure continuity of supply for Zarlink products manufactured at Plymouth. Currently, the majority of the facility’s output consists of telecommunications and medical chips designed by Zarlink. The balance of Plymouth’s output is sold to other global companies.

Approximately 175 Zarlink employees engaged in wafer production are transferring to X-FAB as part of the sale. Zarlink will continue to employ the remaining on-site staff of design engineers, product developers, and test engineers.

Zarlink expects to record no gain or loss on this sale in the 4Q02