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.
@Dylan, I found the title misleading. I know it's customary for journalists to use catchy titles but in this case it can leave people who do not dig into the article with the impression that Microsemi is killing off ALL Actel products. As I read the article, I did not see anything sensational in what Microsemi is saying. I said when the take-over news first broke off that the deal makes sense as both companies have strengths in aerospace and military markets. Anything that serves these two markets would probably be kept (mixed signal, rad-hardened and anti-fuse chips). The rest would go.
In this industry, moving vertical is good, but also planning horizontal market helps to keep business going. While trimming products is good, yet, there are many complementary services that Actel products would provide to Microsemi. Meanwhile, the title of this post, to me, is not truly correct.
It may be a good idea to leverage the mixed signal IC and solely digital programmable logic so that a complete system can be designed. If Microsemi is determined to go for a specific vertical market, such move is good.
The A3P's are really quite nice (especially at the crossroads of power consumption/cost/usable area) so that'd be a real shame to lose... I like the "nestable" pin compatible footprints in TQFP...
The antifuse tech is great for design security too, although I suspect they'd need to keep that to keep the military types happy.
If it was difficult for Actel to win against Xilinx and Altera just try to do it as MicroSemi. I would guess Altera and Xilinx pick up all the 'generic' and FPGA business from Actel. That leaves the high-rel and mixed signal products as the only ones you need to keep. Low Power/Lowest Power might be a keeper short term, but will quickly get overrun by the big guys as the market expands.
This deal caught a lot of us by surprise. But the Microsemi and Actel executives I spoke with yesterday are pretty adamant about the synergies between the two companies.
Does anyone have any insights into which Actel products might be eliminated?
It will be a very good benefit to the industries if leads towards the Analog VLSI design, as Microsemi had got experience in Mixed Mode Designs it can be considered an added advantage, let hope some very good unexpected outcome for this deal.
Microsemi has said that it has seen the opportunities in Russia and that Actel was able to take advantage of those opportunities. That bodes well for other established Western companies to make their move in that part of the world. One just needs a guidebook to maneuver the bureaucratic labyrinth.
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