October 6, 2003 – Motorola has announced plans to separate its Semiconductor Product Sector (SPS) operations into a public company, a move anticipated since chairman and CEO Christopher Galvin announced last week that he would step down as soon as a replacement could be found.
Analysts’ reactions to the news have been mixed. “Our view is it will be modestly negative over time,” Albert Lin, an analyst at American Technology Research, told Dow Jones, because Motorola will now have the option to buy chips from other firms, including Texas Instruments.
Noble Financial Group manager Daniel Morgan also expressed doubt, pointing to the SPS group’s 11% decline in sales and 23% drop in orders from a year ago. But on the flip side, Morgan said wiggling out from under Motorola’s umbrella might enable the chip group to win business from other handset makers.
As an aside, it is worth noting that Motorola has experience in divesting non-core chip business. ON Semiconductor, Phoenix, AZ, Motorola’s former discrete device business, was spun off in 1999.