August 29, 2011 – GLOBE NEWSWIRE — Power chip maker Alpha and Omega Semiconductor Limited (AOS, Nasdaq:AOSL) will exercise an option to acquire 200mm wafer fabrication facility assets from Integrated Device Technology Inc. (IDT, Nasdaq:IDTI), with which AOS has a foundry service agreement. The move takes AOS from fabless to fab-lite, and targets faster time-to-market for high-value products, along with expansion into new markets.
Under its foundry service arrangement with IDT, AOS can acquire these assets for $26 million between September 1 and November 15, 2011. AOS has transfered product to the wafer fab via its foundry agreement with IDT, and developed new technologies at the facility. AOS expects its existing low-production-volume wafer activity there will enable shorter production transfer and ramp up times, according to Ephraim Kwok, CFO of AOS.
The move to fab-lite semiconductor production will "accelerate revenue growth and increase gross margin significantly," asserted Dr. Mike Chang, Chairman and CEO of AOS. Chang noted faster product introductions and expansion into new serviceable available markets (SAMs) among the benefits of owning your own fab. Kwok added that "capacity management and geographic diversification of [the] wafer supply chain," are also enabled. Under the fab-lite model, AOS intends to allocate its wafer manufacturing requirement between its internal facility and outsourced capacity.
Alpha and Omega Semiconductor’s gross margin will "improve significantly over time" compared to fabless margins, after the first two to three quarters of the ramp-up period, said Kwok. Gross margin is expected to decline temporarily as the fab is brought on-line.
The acquisition is subject to the execution of a definitive asset purchase agreement with customary closing conditions between AOS and IDT. AOS currently expects to sign the asset purchase agreement by the end of calendar year 2011 and close the transaction prior to January 31, 2012.
Alpha and Omega Semiconductor Limited, or AOS, designs, develops and supplies power semiconductors, including Power MOSFET and Power IC products. For more information, please visit http://www.aosmd.com.
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