NXP ups stake in Singapore chipmaker

September 28, 2006 – NXP, the former chipmaking arm of Royal Philips, is buying out minority partner EDB Investments Pte. (EDBI) in Systems on Silicon Manufacturing Co. Pte. Ltd. (SSMC), their Singapore chipmaking JV with TSMC. The deal will be completed following NXP’s separation from Philips — NXP was recently purchased by private equity investors weeks ago for $17.6 billion.

SSMC is a CMOS foundry with 0.25-0.14-micron capabilities, offering derivatives and embedded flash memory process. Its capacity was an estimated 40,000 200mm wafers/month in 2005.

Under terms of the deal, NXP will pay $185 million for EDBI’s 17.5% share in SSMC, with an option for TSMC (which owns 32% of SSMC) to acquire a pro rata portion of those shares (~6.8%, for $72 million). NXP, the majority-owner in SSMC with a 50.5% stake, said it would fund the transaction with cash on hand.

“This is a significant transaction as it increases our shareholding in a great company with a good cash flow,” stated Frans van Houten, president and CEO of NXP Semiconductors.

Weeks ago NXP was front-page for accepting a $10.6 billion cash buyout offer from private equity firms led by Kohlberg Kravis Roberts and Silver Lake Partners. That group also filed a last-minute bid to acquire Freescale Semiconductor — leading to speculation that it might combine the two businesses — but dropped out after Freescale was sold for $17.6 billion to its initial suitor, another private equity group consisting of The Blackstone Group, The Carlyle Group, Permira Funds, and Texas Pacific Group.


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