Fairchild Grabs Power

Electronic News, Sept 11, 2000 by Tom Murphy

Makes two company acquisitions crucial to low-power dissipation

In order to play a bigger role in the market for portable wireless consumer devices, Fairchild Semiconductor International acquired two analog semiconductor businesses last week for an estimated $21 million in cash and stock.

The two purchases fit into South Portland, Maine-based Fairchild's plans to grow its analog business, which started at nothing three years ago and has since grown to about $400 million in annual revenues.

Fairchild's latest acquisitions are KOTA Microcircuits of Loveland, Colo., and Micro Linear's Power Management business, based in San Jose.

KOTA, a specialist in high-performance operational amplifiers, has been in existence just two-and-a-half years, according to Keith Jackson, executive vice president and general manager of Fairchild's Analog Group based in Utah. Micro Linear's power management products complement Fairchild's own products in that space and will enable the company to offer a more complete product to its customers, Jackson said.

KOTA is expected to put Fairchild into some important markets. "The high-performance op amps are used for such things as ATE testers and a broad range of products in the high-growth end-applications such as PDAs, web books and information appliances," Jackson said. Other applications that require op amps include cell phones and CD-read/write drives. Op amps help to condition analog signals before they are converted into digital signals, and many consumer applications are calling for more and more signal processing with low-power dissipation, Jackson said. KOTA's products help Fairchild break into that sector. Lower-power dissipation translates into longer battery life and longer operational times for handheld devices.

The KOTA acquisition puts Fairchild in a market that is estimated to be worth a total of $2.8 billion in 2000, according to a company statement. Fairchild provides leading-edge manufacturing technology and new product development resources and therefore will act as a launch pad for KOTA products, according to a statement by Gary Ross, KOTA's chief executive officerand president.

"Micro Linear's power management products fit the core thrust of Fairchild's Analog Component Group," Jackson said. Many of Fairchild's existing power management products are found on the same motherboards as Micro Linear's products. However, there is little or no duplication of the two companies' product lines, according to the firms. One of the hottest potential markets for Micro Linear products is power management for systems using double data rate synchronous DRAM, Jackson said.

"This is another element to sell to the same customer base in the power management arena," Jackson said. "Many of our customers feel that it is much better to deal with fewer vendors who offer a much more complete package."

Micro Linear's product line adds to Fairchild's portfolio of off-line power switchers, low-power battery management devices, video filters and bus terminators. These products are designed into a variety of systems including PCs, PDAs, networking equipment, video systems, and power management and motor control devices.

Combined annual revenues from both companies are expected to reach from $30 million to $40 million, according to a Fairchild release. These are the third and fourth analog companies acquired by Fairchild after it became an independent company in 1997. The company plans to make more acquisitions in this semiconductor sector while maintaining a strategy of the acquisitions adding to earnings.

The KOTA acquisition brings with it 25 circuit designers, Jackson said. Fairchild intends to maintain the company's presence in Loveland and use it to attract new designers to expand the design center there.