SAN FRANCISCO—In making a $430 million cash tender offer to acquire programmable logic supplier Actel Corp., analog and mixed-signal chip vendor Microsemi Corp. is seeking to broaden its product offerings to appeal to core customers in the aerospace, defense and industrial markets, according to company executives. But the company is likely to kill some Actel product lines, they said.
In a conference call Monday (Oct. 4) following the announcement of the tender offer, James Peterson, Microsemi's president and CEO, said Microsemi would trim some "non-productive" Actel product offerings aimed at commercial markets where Actel lags behind programmable logic market leaders Xilinx Inc. and Altera Corp. While he stressed that Microsemi would not kill all Actel commercial products, he said the company would take a hard look at products that don't compete effectively with the big players' offerings. Peterson did not mention any specific products that could be discontinued.
"We will not continue to dilute profitability by chasing the two big competitors in the marketplace today," Peterson said. "That's not Microsemi's game."
While many observers were caught off guard by the proposed acquisition, Peterson and other Microsemi executives stressed that the two companies' common strengths in the military and aerospace segments make them an ideal match.
"At the most fundamental level, Actel is the perfect acquisition for Microsemi," Peterson said. "This company has had a long and successful history in the aerospace and defense markets that we at Microsemi know so well."
"The purpose of this deal is not to enter an FPGA market," said Russell Garcia, Microsemi's executive vice president of marketing and sales, in an interview with EE Times. "The purpose is to add breadth and scale to the markets we both play in very well."
Garcia acknowledged that at first glance it might be difficult to spot the synergies between a programmable logic supplier and an analog/mixed-signal chip vendor. But the move makes plenty of sense from the perspective of a chip supplier wanting to offer customers a broader set of products, Garcia said. The acquisition is part of Microsemi's strategy to "move up the value chain to being basically the highest value capability supplier," Garcia said.
"This acquisition allows Microsemi to move up the value curve and supply its defense and aerospace customers with more sophisticated systems level solutions," said Craig Berger, an analyst with FBR Capital Markets, in a report circulated Tuesday morning. Berger noted that the deal would bring Microsemi new product capabilities including aerospace-targeted flash FPGAs, low-power FPGAs, radiation-hardened FPGAs, Actel's SmartFusion FPGAs with integrated ARM Cortex microcontrollers, and other anti-tamper technologies.