April 21, 2005 – Following through on its intentions to invest in high-growth opportunities-at the expense of other promising businesses-Cypress Semiconductor Corp., San Jose, CA, announced it plans to spin off its SunPower silicon solar-cell subsidiary in an initial public offering. Longtime Cypress CFO Manny Hernandez will shift over to the SunPower unit in 2Q05 to help map out its IPO strategy.
Cypress acquired a 57% ownership in SunPower Corp. in 2002, and has since increased its stake to 84%. The unit’s production facility near Manila, The Philippines, recently began infrastructure upgrades to support a second 25mW line scheduled to achieve initial volume production in 4Q05, with a third 25mW line planned for early 2006. The upgrades mainly will support a recently announced five-year, $300 million contract with SOLON AG, Germany’s largest supplier of photovoltaic modules. SunPower, which is projected to achieve breakeven status in 3Q05, contributed revenues of about $11.0 million in 1Q05 (about 6% of overall Cypress revenues), a 142% increase from the prior quarter.
“With the demand for solar cells far outstripping supply, and the projected output of its production plant in the Philippines booked out through 2005, SunPower’s ability to grow is constrained only by its ability to quickly ramp its manufacturing operations and its access to capital,” stated Cypress president and CEO T.J. Rodgers. He added that investors have “a real appetite for a solar-power company that is managed to the rigorous standards of a Silicon Valley manufacturing company.”
The SunPower announcement fulfills Cypress’ desire to seek increased investments in its higher-growth businesses. In February, Cypress raised eyebrows when it announced it would sell its Silicon Magnetic Systems subsidiary, formed to commercialize magnetic random access memory (MRAM), just weeks after four of seven OEM customers emerged from validation with fully functional products. CEO T.J. Rodgers explained that ongoing development of higher-density MRAMs would encounter design and manufacturing difficulties and result in higher bit pricing than SRAM, “We currently have more attractive places to invest than in the capital-intensive MRAM business,” he noted, specifically citing the SunPower solar cell operation. – James Montgomery, News Editor