Integrated Silicon Solution Inc. said it plans to sell off nearly half of its wholly owned subsidiary in Taiwan to a group of private investors.
In a $30 million to $35 million cash deal, ISSI said it has already sold 42 percent of the subsidiary, and will sell off an additional 1 percent to 5 percent within the next two weeks.
"Our long-term goal is to have ISSI-Taiwan go public on the Taiwan stock exchange," said Jimmy Lee, president and CEO of the Santa Clara, Calif.-based company. ISSI established its Taiwan branch in 1990 and assumed full ownership in 1993. "The partial sale announced today is a first step toward this goal" of taking the unit public, he said.
ISSI said it plans to retain a majority stake in ISSI-Taiwan through at least the end of this year and will use the company for testing and manufacturing logistic services. Lee said he will probably sell additional shares in the subsidiary toward the end of 1998, and plans to own less than 50 percent of the company in 1999.
The transaction is expected to generate a before-tax profit of $13 million to $16 million, which will be applied to the quarter ending this month. That will be helpful, since ISSI is also expecting revenues for this quarter to be flat, approximately $25 million compared with $25.8 million for the June 1997 quarter. ISSI is likely to post a loss of $15 million to $18 million for the current quarter.
"Like many other semiconductor companies, we have seen a slowdown during this quarter," Lee said. This quarter's revenues will also be down from the previous quarter. "We believe the slowdown is principally the result of OEM original equipment manufacturer inventory corrections as well as some softening in demand for OEM products. We believe the cash proceeds from the partial sale of the subsidiary and our continued focus on R&D will position us well as the industry recovers."