LONDON – Power IC vendor Ixys Corp. (Milpitas, Calif.), also parent of Zilog Inc., is buying the 4- and 8-bit microcontroller business of Samsung Electronics Co. Ltd. for about $50 million.
Under the terms of the agreement Ixys will receive nearly 80 products, inventories, intellectual property and other assets related to the 4- and 8-bit business. The acquisition is subject to various customary closing conditions and is expected to be completed within the next month.
Samsung will continue to make the products under an expanded foundry deal with Ixys.
"We have executed a management decision based on the focus on mobile solutions that we are taking in our semiconductor business," said Ben Suh, senior vice president of Samsung Electronics System LSI strategic planning team, in a statement issued by Ixys.
In the same statement Nathan Zommer, CEO and chairman of Ixys, said: "This acquisition provides increased revenues for our higher gross margin IC business, which includes our wholly-owned subsidiaries, Ixys IC division and Zilog, a pioneer supplier of microcontrollers."
He added: "We plan to gain market share for our MCU and IC products, and expand our customer base in industrial, medical and consumer applications. The 4-, 8-bit products fit with our mixed-signal ICs and our power semiconductors, whereby we will be able to offer our customers complete solutions for power management; from the digital control analog driver ICs to higher power devices."
Ixys reported that market research puts the 4- and 8-bit microcontroller market at $3.5 billion in 2013, with shipments of 6.7 billion units.
"In addition to bolstering Ixys' product portfolio, this transaction highlights the strong cooperative relationship with Samsung. We are excited about our ability to continue working and partnering with the Samsung team," said Uzi Sasson, president and CFO of Ixys.
Intel also exited the Microcontroller sector years back, as their R&D and cost models simply did not fit.
The intel invented 8051 continues to be profitable for many, and is now available down to MSOP10.
Zilog have a 8051 family and there is even an 8051 (S3FI1BG) in Samsung's stable.
That said, most of Samsung's parts are niche-custom cored, which will be very hard for IXYS to support, even without adding the Korean :: USA gulf.
One also hopes IXYS have read the foundry-side fine print, very carefully indeed.
I think it's a case of "Size matters". When you're Samsung, a market has to be really big to make it worth your while to address. The revenue for their 4 and 8 bit MCU business is pocket change to Samsung, and probably not a market they can make actual money in.
It's a market Ixys *does* think they can address profitably, and as a much smaller outfit with lower overheads, they may be able to.
Samsung is not selling their product line because it doesn't fit their direction, they are selling it because it is not profitable. This may increase Ixys revenue, but it won't help their profitability.
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