“Infineon and IR are both active in DC-DC, but the portfolio of IR nicely complements the area of point of load,” said Reinhard Ploss, chief executive of Infineon Technologies, in a press briefing. Ploss added that IR has strong “multi-chip package know-how,” that Infineon will leverage to produce a high-voltage system-in-package solution. He also expects International Rectifier to advance Infineon’s power module capabilities.
“We are looking forward to using the gallium nitride,” Ploss said.
Infineon has built a strong footprint in the industrial sector, especially high-voltage parts, including 600 V, 1,200 V, and, for the power grid, 1,800 V, according to Stephan Ohr, research director in Gartner’s technology and service provider unit in San Francisco.
“Infineon believes in alternative energy transfer -- solar and wind, but that market is pretty niche,” says Ohr. “Still, Infineon has arguably the largest catalogue of high-voltage parts specifically earmarked for Smart Building and Smart City programs.”
When Oleg Khaykin, IR’s president and chief executive, joined IR in 2008, the company abandoned the high-voltage (600 V and up) space, pursuing low-voltage MOSFETs, including 30 V devices used in computer power supplies, outputting 5 V or less, Ohr says. “IR treated MOSFETs as a cash-cow and dumped fabrication facilities when demand dwindled and utilization dropped. But that forced the company to outsource when demand periodically spiked.”
Based on unit shipments, MOSFETs are the most popular power transistor. Nearly 36 billion are expected to ship this year; computing equipment and industrial systems will each account for 25% of the shipments, according to Ohr’s estimates. “But margins are typically thin if you outsource an 18-cent part,” he notes.
The combined company expects to achieve gross margins of more than 40% with operating margins at 15%. Over the last three years, IR has taken drastic steps to achieve a greater level of utilization at its factories by shutting down older facilities, including a 5-in. fab in El Segundo, Calif., and a 6-in. fab in Newport, Wales.
“IR will benefit from Infineon’s 300 mm Dresden fab, as well as their 200 mm facility in Malaysia. And Infineon will benefit from IR’s footprint in the computer world and from IR’s research in gallium nitride,” says Ohr.
He notes that both companies are strong in power transistors. Infineon is the leading supplier in the market with more than $1 billion in power transistor revenue in 2013. IR was No. 6 with nearly $600 million in revenue. “Both companies have strengths in devices for computing, industrial, and automotive environments.”
International Rectifier capped off fiscal 2014 with $1.11 billion in revenue, a 13.3% increase from $977 million in the prior fiscal year. IR climbed out of the red, posting $58.7 million in profits, compared with an $88.8 million loss in fiscal 2013. It also managed to boost gross profit margins, which grew to 36 percent from 26.8 percent year-over-year on a non-GAAP basis.
Infineon will pay $40 per share for International Rectifier, which represents a 51 percent premium over IR’s closing share price on August 19, 2014. The merger, Infineon’s largest deal since its inception in 1999, is expected to close in late 2014 or early 2015.
— Junko Yoshida, Chief International Correspondent, EE Times
— Ismini Scouras writes about the semiconductor industry for EE Times.