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Sanghi: Why Microchip insists on buying Atmel

Posted: 07 Oct 2008 ?? ?Print Version ?Bookmark and Share

Keywords:Atmel acquisition? MCU? ASIC?

Microchip Technology has confirmed in an interview with EE Times that the company is bidding to acquire Atmel Corp. for $2.3 billion in an effort, along with ON Semiconductor Corp., to raise market share, reduce costs and increase profitability in the MCU business.

Although the offer has turned hostile after Atmel's rejection of Microchip's initial bid, Steve Sanghi, chairman, president and CEO, Microchip insisted he is still willing to renew negotiations with Atmel's management. Microchip said it still considers other options if this effort failed. During the interview, Sanghi said the simple reason that Microchip is biding for Atmel is that its businesses are underperforming that has led to the decline in the stock price by more than 46 percent in the past year.

He added that the MCU business has good prospects, however at present it is very difficult to extract value because of the presence of other businesses that are not performing well. "We have devised a creative scheme with our partner ON Semiconductor that would allow us to draw the diamond out of the rough at Atmel," he noted.

Sanghi clarified: "We do not want to own Atmel's entire operation. This is why we need a partner who would consider the other businesses' strategy and this makes sense for ON Semiconductor."

He said: "We will be selling the ASIC business because it doesn't make money and we are not interested in its operation. It's possible to turn around the ASIC business but it's an area where you need scale. There are other companies that are very good in ASICs. That's not us."

"Our bid for Atmel is driven by the need to create scale for Microchip in the MCU business," he added. "Atmel's MCU business will increase Microchip's annual sales by half. The transaction will unlock value for Atmel shareholders and allows Microchip to unlock value in Atmel's MCU business for our own shareholders," he stressed.

- Bolaji Ojo
EE Times





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