IMI to buy PSi technologies, adding SATS to EMS offering

(July 6, 2010) — Integrated Microelectronics Inc. (IMI), a leading electronics manufacturing service (EMS) provider to OEMs, announced an agreement to acquire 67% of PSi Technologies Inc. (PSi), an independent semiconductor assembly and test services (SATS) provider.

Both companies are headquartered in the Philippines. IMI, a member of the Philippine conglomerate Ayala group, will own 56%, and Narra Venture Capital II (NarraVC) will own 11% of PSi. The aggregate transaction value is approximately $30 million.

Gartner Analysis

The acquisition is a firming of the partnership formed between the two companies beginning in 2006. At that time, IMI agreed to promote PSi Technologies’ power SATS offerings to its foreign clients, while PSi marketed IMI’s EMS offerings to its own customers. The agreement also helped these two global electronics companies come together to promote electronics industry in the Philippines.

The acquisition helps give sustainable financial backing to PSi, which has experienced lower growth in recent years than many companies in the SATS industry. At the same time, it gives IMI a foothold in the growing convergence of power SATS and EMS. Both of the companies provide manufacturing services for the system-in-package (SiP) and multichip module (MCM) markets, whose products are used in almost all cell phones and wireless products. By combining the two companies, the overlap in competition for the growing markets of SiP and module assembly will be reduced, while the benefits of merging the design groups will be gained. Additionally, cost savings on infrastructure, supply chain management and R&D will be realized. This acquisition will also allow IMI to expand further and become more competitive in the mobile/wireless device market, while at the same time reducing its reliance on the PC market.

While IMI and PSi have had a symbiotic relationship for many years, this is the second recent merger involving vertical integration of electronic outsourcing: a semiconductor packaging company together with a major EMS manufacturing company. As manufacturing technologies further converge and overlap, it becomes more difficult to compete for the various, individual, value-added functions in the semiconductor and electronic products manufacturing supply chain. Gartner has believed for some time that the outsourcing services supply chain can benefit from vertical/virtual integration (and this situation has been accelerated by the world economic situation).

This announcement is further indicative of the increasing interest in partnerships, mergers and acquisitions between the players in the foundry/SATS/EMS and ODM markets.

Of further note: PSi has been one of the longtime suppliers of outsourced packaging and assembly services to the semiconductor industry, having done so as various other entities before it incorporated in 1999. PSi also holds the dubious distinction of becoming the first company based in the Philippines to be listed on the NASDAQ stock exchange. This occurred in March 2000, during the height of the dot-com craze. IMI also previously participated in the SATS industry years ago (in the 1980s) with its affiliate, AME.

For more information, contact Jim Walker at [email protected]


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