Summit, Credence in cross-purchase deals

Electronic News,  May 26, 1997  by Judy Erkanat

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Summit and Credence entered into a definitive agreement for Summit to sell the TSSI assets, used in its Test Development Series (TDS) products, to Credence, but will retain and continue to own the assets of Summit's system-level design automation (SLDA) products.

"Our intent is to take a leadership position in bridging the gap between EDA tools and the test world," Credence chairman and CEO Bill Bottoms told Electronic News. "TSSI will remain a separate company; we will just invest more into it."

Dr. Bottoms said he expected to continue TSSI's working relationships with other automatic test equipment (ATE) manufacturers, as well as TSSI's IC producer customers. "We will serve all TSSI customers in an environment where customer information will be absolutely secure and confidential," he said.

"We aren't just throwing up a 'Chinese wall.' Credence and TSSI will be separately located, with TSSI remaining in Beaverton, Ore., and having a separate board of directors."

Observers said the limited size of TSSI's market caused Summit to focus on its other business. Some also questioned the reality of getting companies like Schlumberger and Teradyne to relinquish information to a competitor like Credence.

Doubts about the deal's soundness were voiced by several industry veterans. "It's a $10 million business at best," said one. "Every competitor will know that Credence values its ATE business much more than TSSI's partners. No partner, like HP, Teradyne or Schlumberger, will trust TSSI any longer."

"This is definitely an unusual deal," said Dave Flaningam, former CEO and co-founder of TSSI, and former VP of Asian operations at Credence, who is now VP of Asian operations at Genus. "It doesn't make sense to me. TSSI was always in a neutral position between design and ATE. I think this is a doomed strategy."

The companies also penned definitive agreements for Credence to purchase $20 million of Summit's Visual Testbench product licenses, and related interfaces and maintenance services. In addition, Summit and Credence will jointly develop and market Summit's Visual Testbench product for IC test, while Summit will continue to independently develop and market its Visual Testbench product for IC design.

"What will Credence even do with $20 million of Summit's Testbench software?" Mr. Flaningam asked. "It is primarily for engineers, not production, which has been Credence's focus."

Credence's commitment to buy that much Virtual Testbench software was also questioned by others. "I don't see Credence's market either needing or wanting that type of capability," commented one source.

"It's what designers want and need. Cadence has a competing product and IMS (Integrated Measurement Systems) sells it. If Credence gets CAST working and decides to compete with IMS and HP for the engineering business, they would need such a tool. However, the design market for testers is small, notice that HP has been working hard to become a production tester supplier, and it's already dominated by IMS and HP. There's no room for a third vendor."

Dr. Bottoms said Credence plans to sell the Summit Visual Testbench product, and called the deal a multi-year OEM agreement.

The transactions will allow Summit to focus on the development and marketing of its SLDA product line and let Credence bundle TDS products and Summit's Visual Testbench products with its ATE products.

The acquisition of the TDS assets is subject to standard closing conditions and is scheduled to close in early July.

Summit was formed three years ago through the merger of TSSI and SEE Technologies of Israel (EN, Feb. 21, 1994) to address the electronic system design automation (ESDA) market.

COPYRIGHT 1997 Reed Business Information, Inc. (US)
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