Semtech extends consumer strategy

Electronic News, Oct 16, 1995

Newbury Park, Calif.--Semtech Corp., continuing its strategy to expand product lines into consumer markets, said it has completed the purchase of Gamma, Inc., doing business as ECI Semiconductor. The Santa Clara, Calif.-based analog IC maker has been a foundry supplier to Semtech for the past year.

Semtech will issue 775,000 new shares of common stock--a total value of $19.76 million, based on a closing share price of $25.50 late last week--in exchange for all outstanding shares of ECI. The transaction will be accounted for as a pooling of interests. All of ECI's approximately 110 employees will be absorbed by Semtech, it was said.

The acquisition of ECI will ostensibly allow Semtech to make further inroads into consumer markets, as it shifts emphasis away from military applications. Earlier this year, Semtech reported sales to military and aerospace customers had dropped to 30 percent in 1Q95 from 50 percent in 1Q94 (EN, June 5).

Continuing that trend, through a combination of ECI's design and production capabilities and Semtech's resources and sales network, Semtech will be able to expand foundry capacity as well as product lines, the company said. Specifically, Semtech customers will now have access to ECI's line of bi-polar linear arrays in die sizes ranging from 1,089 sq. ml. to 14,042 sq. ml. and a CMOS family of arrays in sizes ranging from 3,717 sq. ml. to 50,280 sq. ml. A series of standard linear power circuits will also be available, Semtech said.

"The combination of our two companies brings complementary strengths and advantages that enhance our ability to address new and growing market opportunities," said Michael Himes, president of ECI Semiconductor. "ECI will provide important additions in process technology, product diversity, wafer fab capacity and a new customer base."

"In the past year, as a supplier to Semtech, ECI has demonstrated unique capabilities in meeting technical and manufacturing challenges," said John Poe, Semtech president and CEO. The company said it will continue to supply ECI's current foundry customers through the Santa Clara design and manufacturing center. Semtech also has wafer fab facilities in Newbury Park and Corpus Christi, Texas, as well as assembly and test facilities in Glenrothes, Scotland and Reynosa, Mexico.

ECI is a 10-year-old supplier of foundry wafers, custom linear and digital arrays and general purpose analog semiconductors. ECI reported revenues for the periods equivalent to Semtech's first and second quarters of FY96 of approximately $3.5 million and $4.2 million respectively. Semtech reported first and second quarter revenues of approximately $9.3 million and $10.6 million respectively.