NXP set to increase stake in Singapore foundry

NXP Semiconductors, formerly Philips Semiconductors, will buy for about $185 million the 17.5 percent of shares owned by EDBI (EDB Investments Pte. Ltd) in Singapore-based SSMC (Systems on Silicon Manufacturing Co. Pte. Ltd).

The company said it would conclude the transaction in the three months following completion of the separation of NXP from Royal Philips.

SSMC is a manufacturing joint venture between Philips (50.5 percent and TSMC (32 percent). The foundry offers 0.25micro;m to 0.14micro;m CMOS manufacturing with derivatives such as embedded flash.

According to the original SSMC shareholders agreement, TSMC has the right to acquire a pro rata portion of these shares. In that case, NXP will acquire approximately 10.7 percent of SSMC for about $113 million.

NXP said Wednesday it expects to fund the purchase with cash. EDBI agreed to sell its shares in SSMC at the price specified in the option agreement currently in place between Philips and EDBI, as long as the sale is completed by Dec. 31, 2006.

"This is a significant transaction as it increases our shareholding in a great company with a good cash flow", said Frans van Houten, President and CEO, NXP.

A consortium between Kohlberg Kravis Roberts & Co., Bain Capital, Silver Lake Partners, Apax and AlpInvest Partners NV is set to take an 80.1 percent stake in the semiconductor operation, with Philips retaining a 19.9 percent interest.

- John Walko
EE Times Europe