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MHS buys Zarlink's analog foundry biz

Posted: 04 Mar 2008 ?? ?Print Version ?Bookmark and Share

Keywords:analog foundry? wafer manufacturing? CMOS?

Zarlink Semiconductor Inc. has sold its analog foundry in Swindon, United Kingdom to MHS Electronics UK Ltd, a subsidiary of MHS Industries Group.

As part of the agreement, Zarlink has transferred all assets related to its Swindon foundry business, including the analog foundry and equipment, employees, third-party inventory and other assets but excluding cash on hand, accounts receivable and accounts payable, to MHS Electronics for Euro 1. In addition, Zarlink has paid MHS Electronics about $3 million to support restructuring initiatives.

The companies have also signed a three-year agreement to ensure continuity of wafer supply for Zarlink, under which Zarlink will deposit $3.9 million, representing about nine months of product orders.

As a result of this sale, Zarlink expects to record a book loss of approximately $13 million or 10 cents per share. Zarlink's guidance for Q4 08 has been revised from a loss of 6 to 8 cents per share to a loss of 16 to 18 cents per share. Due to the timing of closing, Zarlink is maintaining its revenue guidance of $53 million to $56 million for Q4, based on the factors provided in the Q3 08 statement issued Feb. 5.

"This transaction will benefit Zarlink and its shareholders, while the analog foundry employees will prosper as part of a pure-play semiconductor foundry," said Kirk Mandy, president and CEO, Zarlink. "Zarlink can now focus our resources solely on growth initiatives in the wired communications, optoelectronics and medical markets. Management and the Board of Directors will continue to review all aspects of our business, and where appropriate take the strategic steps necessary to position ourselves for success in these markets."

Zarlink's analog foundry provides bipolar technology processes and design services for fabless semiconductor companies and OEMs. MHS Electronics offers contract manufacturing on specialized mixed-signal CMOS and BiCMOS processes, supported by project management, wafer manufacturing, prototyping and test/assembly services, for the aerospace, defense and medical markets. Approximately 120 Zarlink employees will be transferred to MHS Electronics as part of the sale, representing all of the foundry employees.

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