TUCSON, Ariz. Now that Texas Instruments Inc. has completed its $7.6 billion acquisition of Burr-Brown Corp., the tricky merger portion of the M&A has begun.
Top TI officials, meeting here on Wednesday (Aug. 30) with Burr-Brown employees and the press, promised to take a steady-but-not-hurried pace in merging the venerable analog chip supplier into Texas Instruments. In doing so, TI managers said the Dallas-based chip maker will put customer requirements ahead of merger activities. They also said TI will consider upgrading Burr-Brown's aging 4-inch wafer fab in Tucson, while maintaining existing foundry agreements struck by Burr-Brown.
To help insure that the merger goes smoothly, Burr-Brown president and chief executive officer Syrus Madavi said he will stay with the organization for at least six months and will be entirely focused on maintaining market momentum. After that, Madavi said he will explore his options.
Both Madavi and TI managers re-emphasized what they called the snug fit of the two companies. TI claims it has taken the No. 1 spot in analog chip sales by taking market share in high-volume, building-block products. TI has placed a great deal of analog and mixed-signal emphasis on the company's major customers in digital signal processors (DSPs).
Meanwhile, 44-year-old Burr-Brown has 25,000 customers worldwide, and has worked hard to develop high-performance data converters as well as operational amplifers that TI needs, said managers in interviews with SBN.
"Bringing the businesses together will suddenly give TI access to 25,000 customers, who initially want standard products for their first-generation systems," said Madavi, who was also chairman of Burr-Brown prior to the completion of the acquisition last week. "And as time goes on and the systems are proven in the marketplace, customers will want to go with application-specific standard products vs. the catalog standard products they are getting from Burr-Brown," he said.
TI's hope is to use the Burr-Brown acquisition to tap a broader range of customers for integrated mixed-signal and analog products as well as its DSP chips, said Dan Reynolds, TI's vice president of advanced analog products. In addition, TI aims to introduce its product portfolio to Burr-Brown customers, he said.
"Now that we have finished the close of the transaction, we are entering the integration phase," Reynolds said. "Syrus and I are 'mapped' into a team that is working those issues now." Reynolds said the merger process could continue into next year.
"We are impressed with their capabilities in core converters and high-speed amplifiers. And we will take advantage of that and will probably drive more of the product focus for those types of semiconductors out of the Tucson operation," said Reynolds, when asked about TI's plans for the southern Arizona facility.
At the time of the acquisition, Burr-Brown had 1,500 employees worldwide with about 1,200 in North America. Its revenues totaled $291.4 million in 1999 with a net income of $45.7 million.
Madavi said the Burr-Brown operation is considering a 6-inch wafer fab upgrade to its existing 4-inch front-end in Tucson. The fab is now used to produce Burr-Brown devices with 1.0-micron and larger feature sizes as well as with a variety of analog/mixed-signal processes. The company has relied on outside foundries to make advanced products with feature sizes below 1.0 micron.
TI has opted to build its own capacity for ICs rather than outsourcing to third-party foundries. However, the company has no immediate plans to move Burr-Brown's products from silicon foundries to its own wafer fabs, Reynolds said.
"For the short term the next one to two years there will probably be little impact on the manufacturing direction for Burr-Brown," Reynolds said. "The Tuscon fab will continue to be loaded and utilized, and the Burr-Brown product line will continue to utilize the foundry relationships and subcontract assembly relationships."
But TI does intend to introduce it own analog and mixed-signal process technologies to Burr-Brown chip designers soon. "Over time we will see those new product flow into TI fabs," Reynolds predicted.
On Nov. 1, TI plans to launch a unified sales system, which will handle both its existing products and the acquired Burr-Brown portfolio, said Alun Roberts, director of marketing for advanced analog at TI. At that time, the sales staffs of Burr-Brown and TI will be able to handle products across the entire company for customers, he said.
TI's analog field support is also growing as a result of the merger. "With the combination, we will have 77 field-deployed application engineers. That's more than any other analog supplier," said Roberts, who estimates that the next-closest competitor has about 55 or 60 application engineers in the field. "We are also accelerating tool development for customers," he said.