TORONTO — It’s the romantic comedy of the memory business. Cypress Semiconductor and Integrated Silicon Solution, Inc. (ISSI): Will they or won’t they?
After ISSI put the kibosh on a transaction with Cypress at the beginning of the week because of anti-trust concerns, Reuters reported Wednesday that it had agreed to Cypress's terms for the $643 million deal to proceed.
ISSI said in a statement that it had “determined in good faith … that the current Cypress offer would be more favorable from a financial point of view to the ISSI stockholders than the merger under the Uphill Agreement [a prior agreement with Uphill Investment Co.] and that the failure to enter into a definitive agreement with Cypress on the terms in the current Cypress offer would reasonably be expected to be inconsistent with its fiduciary duties under Delaware Law.” This was despite concerns that it and Cypress would have to make anti-trust filings for the transaction in the U.S. and Germany and possibly other jurisdictions which would be both expensive and time-consuming.
But hold on.
While Cypress and ISSI briefly reunited on the dance floor on Wednesday, Thursday it released a statement announcing it had entered into a further amendment to its previously announced merger agreement with Uphill Investment Co. The amendment means the merger consideration was increased to $21.00 per share in cash, from the $20.00 per share in cash first offered in March. ISSI also announced that its special meeting of stockholders to consider approval of the Uphill acquisition and related matters will be held on June 19, 2015 at 2:00 p.m. Pacific Time.
ISSI had entertained the Cypress offer per the original Uphill agreement that it would consider a superior offer. Now that the Uphill agreement has been amended, trumping the Cypress offer of $20.25 per share, the ISSI Board of Directors continues to recommend that ISSI's stockholders vote for the adoption of the Uphill Agreement, having determined the proposal from Cypress no longer constitutes and would not be reasonably expected to lead to a superior proposal.
ISSI was founded in 1988 and is based in Milpitas, California, with offices in China, Europe, Hong Kong, India, Japan, Korea, Singapore and Taiwan. The company, which went public in 1995, designs and develops high-speed and low-power SRAM and low- and medium-density DRAM and NOR flash products for the automotive, communications, digital consumer, industrial and medical markets. Customers include Panasonic, Alcatel-Lucent, Cisco Systems, Motorola, Samsung, Sharp, Sony, Toshiba, GE, Honeywell and Siemens.
Based in California, ISSI products include SRAM, DRAM and NOR flash with a focus on the automotive, communications, digital consumer, industrial and medical markets.
The potential merger of Cypress and ISSI first came to light in mid-May when Cypress sent a letter to the board of directors of ISSI, proposing an acquisition of all outstanding shares. Had the Cypress/ISSI merger come to fruition, it would have bolstered Cypress’s offerings in the automotive segment, which is growing thanks in part to onboard infotainment systems.
One of the chief anti-trust concerns ISSI had with the Cypress transaction was that it would mean the combined entity would exceed 70% of market share in Germany and be the sole supplier of SRAM to German automotive manufacturers.
While discussing its latest 4Mb asynchronous SRAM with on-chip error-correcting code (ECC) with EE Times in April, Cypress did acknowledge that the overall SRAM market has been shrinking, but that the company had seen growing demand for automotive applications and the Internet of Things (IoT), such as wearables. Furthermore, Cypress sees the requirements of wearable electronics driving the resurgence of SRAMs, since size and power are critical factors.
Jim Handy, principal analyst with Objective Analysis, didn’t completely agree that IoT would necessarily become a large boon to the SRAM market, as low-power SRAM has been losing ground to DRAM, and overall, the SRAM market is being chipped away at all sides by cheaper alternatives. He said Cypress is relatively unique in that it has a broad product range, while most SRAM companies focus on specific product niches.
Networking is one area where SRAM continues to excel as Internet traffic continues to grow exponentially and network infrastructures must continue to upgrade in order to handle moving and storing more data. The 100 to 400 Gigabit linecards found in next-generation switches and routers are hungry for memory that can support the random transaction rates found in network traffic today. Other applications for SRAM include military hardware and medical devices. But compared to the DRAM segment, SRAM is much smaller, and the market has become more specialized.
There is still innovation to be had in the SRAM segment. Earlier this year, Intel described carving SRAMs at 14nm. The 0.0500um2 SRAM bitcell is capable of storing 14.5 Mbits per mm 2 and is part of a memory array that will be widely used in Intel’s future SoCs, such as cellular modems that use hundreds of Mbits on a die.
—Gary Hilson covers memory and flash technologies for EE Times and is the editor of Memory Designline.
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