In an effort to grow its presence in the medical, lighting, and industrial markets and gain high-voltage process technology expertise, Microchip Technology Inc. has agreed to acquire Supertex Inc. for $394 million in cash.
Supertex (Sunnyvale, Calif.) is a niche analog and mixed-signal IC vendor with more than 300 proprietary products, and 58 patents with 36 pending. Supertex's product portfolio complements Microchip's core analog and microcontroller businesses without any overlap, and gives Microchip the high-voltage capability that it didn't have, according to Steve Sanghi, president and chief executive of Microchip, [Chandler, Ariz.].
“It adds proprietary high-voltage 50 volts to 1,000 volts analog and mixed signal products to our product portfolio and it broadens our power management portfolio,” Sanghi said. “It adds high-voltage process technology know-how to Microchip that will enable new solutions for our current businesses.”
Microchip’s voltage capability caps out at 60V, which supports only a limited number of parts, Sanghi said. “They can actually connect an IC chip across a 1,000 volt line directly. There are many more high-voltage parts in 110-volt environment in lot of different applications—that’s where the commanding position is. They are the expert in the industry for high voltage.”
Indeed, analysts believe Supertex’s high-voltage process technology prowess is the main attraction for Microchip. “Microchip’s current process of up to 60V, leading us to believe Supertex’s proven high-voltage process technology could be a key reason for the deal, which will enable Microchip to target new industrial applications,” said Tore Svanberg, an analyst with Stifel Nicolaus, San Francisco.
Supertex’s dominant revenue driver is the medical sector, which accounted for 39% of revenue in its third fiscal quarter ended December. It also serves the LED lighting industry [both general and backlighting], as well as the industrial sector, all of which are key growth areas for Microchip, Sanghi said. Supertex’s annual revenue run rate is approximately $65.9 million.
In its third quarter fiscal year 2014 ended December, Microchip’s sales of $482.4 million were down 2.1% sequentially and up 15.9% from net sales in the year-ago quarter. Microchip expects to close the Supertex deal for $33 per share in the second calendar quarter of 2014.
— Ismini Scouras is a freelance writer for EE Times.