Fairchild Semiconductor CFO Projects Doubled Revenues; Growth Driven by New Products, Acquisitions and Multi-Market Demand

Business Wire, March 2, 2000

Business/Technology Editors

SAN FRANCISCO--(BUSINESS WIRE)--March 2, 2000

Joe Martin, executive vice president and chief financial officer of Fairchild Semiconductor International (NYSE: FCS) today predicted the company will double its annual revenues by 2002. Driven by new product development, continued strategic acquisitions and a dynamic global demand for multi-market semiconductors, the company expects its 2002 revenues to be twice those of 1999, duplicating the growth rate of its first three years.

Martin, speaking at the Robertson Stephens Technology Conference here, said, " Our market is strong and our growth strategy is in place. The total available market for those semiconductors belonging to the multi-market segment is expected to reach $60-billion by 2002, according to the Semiconductor Industry Association. Fairchild, with its strong emphasis on new product development and strategic acquisitions, is poised to capitalize on this opportunity."

Fairchild Semiconductor became an independent company in March, 1997, when it developed a new business model in the semiconductor industry focused on high performance building block components that could be sold into a wide variety of end applications. The company has more than 50,000 customers globally, in the telecommunications, internet hardware, computer, consumer, industrial and automotive markets. "Our diversity is our strength," says Martin. "We're focused on key multi-market segments and have built industry leading positions in our focus areas including power, analog and logic. We'll do the same in the interface arena."

The company was founded with initial sales of $690-million and 6500 employees worldwide. Three years later, Fairchild has an annual revenue run rate of $1.4 billion and employs 8400 globally.

The company expects continued growth to be fueled in large part by new product development. Martin says the company's focus on R&D has paid off. "New product revenues have soared from 5% of total sales two years ago to more than 28% of total sales revenue today. And we plan to increase that percentage. We're seeing a strong return on our R&D investment, both in terms of total sales generated and increased gross margins. For the quarter ending in December, our gross margins exceeded 31%, up from 25.4% for the quarter ending June, 1999. We expect those margins to be even higher in this quarter. Strong investment in new product development is the lifeblood of a successful company in the multi-market arena."

"The second key to our growth strategy," says Martin, "is a continued focus on strategic acquisitions. In less than three years, we've completed two acquisitions. Raytheon Semiconductor gave us our foundation in the analog business. Last year's $450-million acquisition of Samsung's Power Device business gave Fairchild the most comprehensive power discrete portfolio in the industry while expanding our analog offerings. Our analog portfolio of more than 700 products includes the top 100 highest volume products.

"We expect future acquisitions to meet our success criteria," says Martin. "Any acquisition must add complementary products to our multi-market focus, strengthen our geographic markets and open up new end market opportunities. Further, Fairchild acquisitions must be financially sound and able to contribute profitably from day one."

Fairchild Semiconductor International (www.fairchildsemi.com) is a global company solely focused on designing, manufacturing and marketing high performance semiconductors for multiple end market uses. Fairchild's multi-market components are used in computer, telecommunications, automotive, consumer and industrial applications. Supplying logic, interface, analog, mixed signal, non-volatile memory and power products, Fairchild is filling the gap in the global supply of building block semiconductors. The company is headquartered in South Portland, Maine, USA, with 8,400 employees worldwide. Additional manufacturing facilities are located in Utah, South Korea, Malaysia and the Philippines, with regional sales offices throughout the world.

Special Note on Forward Looking Statements:

This news release includes "forward-looking statements" within the meaning of section 21E of the Securities Exchange Act of 1934. Forward looking statements often, though not always, include words or phrases such as "predict," "project," "believe," "expect," "estimate," "intends," and "appears." Forward looking statements that express our predictions, projections, beliefs, plans, objectives, or future events or performance may involve estimates, assumptions, risks, and uncertainties. In addition to factors discussed above, many other factors could cause actual results to differ materially from those expressed in the forward looking statements. Among these factors are the following: changes in overall economic conditions; changes in demand for our products; changes in inventories at our customers and distributors; technological and product development risks; availability of manufacturing capacity; availability of raw materials; competitors' actions; loss of key customers; order cancellations or reduced bookings; changes in manufacturing yields or output; significant litigation and the impact on our business due to internal systems or systems of suppliers and other third parties adversely affected by year 2000 problems. Other risk factors are listed in the company's annual report on Form 10-K for the year ended 30 May 1999 (see the Risk Factors section of the Business description and the Outlook and Business Risks section of Management's Discussion and Analysis of Financial Condition and Results of Operations).