Vishay set to gain Temic, and resolves IC dilemma

Electronic News, March 2, 1998 by Heidi Elliott

Malvern, PA.--On the eve of its scheduled closing on the acquisition of the Temic Group, Vishay Intertechnology Inc. has sold the IC portion of that group to Atmel Corp.

Vishay's purchase of Temic from Germany's Daimler-Benz for $500 million, agreed to in December (EN, Dec. 22), is expected to close this week. In acquiring Temic, passive component leader Vishay is most interested in Siliconix, a leading player in Power MOS products. The acquisition strengthens Vishay's move into the discrete semiconductor product arena, but also puts it in the active IC business, which was not desirable for CEO Felix Zandman.

"When we acquired Temic, we said we'd be looking for a solution (to the IC issue) and we found one," said Dr. Zandman. Last week, Vishay agreed in principal to sell the Integrated Circuit Division to Atmel for $140 million. That deal is scheduled to close by the end of this month. The IC unit has $300 million in revenue, $200 million from ASIC business, $100 million from microcontrollers. Atmel gets a fab in Germany that makes bipolar 6-inch wafers and has a small amount of silicon germanium capacity, a fab in France that makes CMOS 6-inch wafers, and a radio frequency design facility in the United Kingdom. The two companies had been in discussions for a few months about this transaction.

For Atmel, the deal brings the company closer to its goal of becoming a predominantly logic company. Right now its sales are split 65-35 microcontroller to logic, said Kris Chellam, chief financial officer. With the Temic sale, the balance is closer to 50-50. "We want to be 65-35 the other way," noted Mr. Chellam. To reach that goal through internal growth would take the company three to five years. Now the company expects to do it in closer to three years. Future acquisitions would speed up that timetable. "One of our goals is to put an entire cell phone on one chip. We need more RF technology to do that," Mr. Chellam added.

Vishay, meanwhile is left with a net cost of $360 million for the Temic purchase. The remainder of the group has sales of about $550 million. What remains is Siliconix, and on the Telefunken side, diodes, transistors and opto-electronics. And, Dr. Zandman, noted, the company might not be through with acquisitions. "At this point we have a lot to digest. But it is quite probable that this is not the end of the road," he said.