Magma acquires Knights Tech from FEI

November 20, 2006 – FEI Co. has sold its Knights Technology subsidiary, which makes yield management and failure analysis software to collect and graphically analyze fab data, to Magma Design Automation Inc. for an undisclosed amount — although FEI said the deal will result in a net pretax gain of about $2.8 million in 4Q06.

FEI, which bought Knights Technology as part of a $6 million acquisition of EGSoft, a division of Electroglas, in July 2003, and a year later spun off the business as a wholly owned subsidiary, said the unit accounted for less than 2% of the company’s $445.4 million in consolidated revenues over the past 12-month period. Magma stated that it expects Knight’s products to contribute approximately $1.5 million to Magma’s total revenue for the remainder of the company’s fiscal year, after purchase accounting adjustments.

For Magma, Knight’s yield management presence provides an inroad into fabs to help calibrate Magma’s process models for IC manufacturers, and improve design implementation. Magma also stated it plans to “bring design intent” into Knights’ CAD navigation tools, to help customers analyze manufactured ICs for systematic and parametric defects.

FEI investor relations rep Fletcher Chamberlin, said the decision came several months ago as part of an ongoing process to focus on the company’s core products, primarily electron microscopes and focused ion beam tools. He indicated that Magma’s offer was “the most attractive offer,” but would not reveal who any of the other bidders were. “As a leading provider of semiconductor design software, Magma will be able to more effectively utilize Knights’ software,” stated Don Kania, president and CEO of FEI, adding that Magma intends to hire the Knights team, and FEI will continue to use Knights’ software products in select FEI systems.

Former Gartner EDA guru and now solo analyst Gary Smith from GarySmithEDA pointed out that Knights’ technology was mainly used by backend companies, and that Magma probably saw that the technology could add some functionality to its own. “They’re very good at spotting these companies with technology that’s interesting but not developed,” he said, noting that Magma has had ~16 acquisitions in the past year or so, all smaller outfits. “Magma probably thinks it can combine [Knights] with other tools to make a bigger tool,” Smith said. Magma sells the entire flow that way…combine with a few other technologies, suddenly it’s part of a $350,000 tool.”

A year ago, Knights said it was working to link its Camelot and YieldManager software with Cadence’s Encounter Diagnostics solution, to help fabs better utilize yield diagnostic and fab data to identify and resolve yield excursions. Customers of both companies face shrinking process geometries and intense demands to ramp product yields quickly, the two firms said.

An unidentified semiconductor manufacturer was said to be serving as the initial catalyst for the Cadence/Knights joint effort, helping the companies define specific areas where yield diagnostic data from Encounter Diagnostics could be quickly passed to Camelot to more easily perform physical failure analysis, with results from yield diagnostics further analyzed by YieldManager to help improve yields in the fab.


Easily post a comment below using your Linkedin, Twitter, Google or Facebook account. Comments won't automatically be posted to your social media accounts unless you select to share.