Microchip buys Supertex for high-voltage process tech
Microchip Technology has agreed to pay $394 million to acquire Supertex Inc. in order to fortify its presence in the medical, lighting, and industrial markets, as well as gain high-voltage process technology expertise.
A niche analogue and mixed-signal IC supplier, Supertex has over 300 proprietary products, and 58 patents with 36 pending. Microchip president and CE Steve Shanghi said that Supertex's product portfolio complements Microchip's core analogue and microcontroller business without overlap, providing the high-voltage capability the company didn't have.
"It adds proprietary high-voltage 50V to 1,000V analogue and mixed signal products to our product portfolio and it broadens our power management portfolio," Sanghi said. "It adds high-voltage process technology know-how to Microchip that will enable new solutions for our current businesses."
Microchip's voltage capability caps out at 60V, which supports only a limited number of parts, Sanghi said. "They can actually connect an IC chip across a 1,000V line directly. There are many more high-voltage parts in 110V environment in lot of different applications—that's where the commanding position is. They are the expert in the industry for high voltage."
Indeed, analysts believe Supertex's high-voltage process technology prowess is the main attraction for Microchip. "Microchip's current process of up to 60V, leading us to believe Supertex's proven high-voltage process technology could be a key reason for the deal, which will enable Microchip to target new industrial applications," said Tore Svanberg, an analyst with Stifel Nicolaus, San Francisco.
Supertex's dominant revenue driver is the medical sector, which accounted for 39 per cent of revenue in its third fiscal quarter ended December. It also serves the LED lighting industry [both general and backlighting], as well as the industrial sector, all of which are key growth areas for Microchip, Sanghi said. Supertex's annual revenue run rate is approximately $65.9 million.
In its third quarter fiscal year 2014 ended December, Microchip's sales of $482.4 million were down 2.1 per cent sequentially and up 15.9 per cent from net sales in the year-ago quarter. Microchip expects to close the Supertex deal for $33 per share in the second calendar quarter of 2014.
- Ismini Scouras
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