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Thursday, December 10, 2009

Farewell Zilog

Zilog, the inventor of the ubiquitous Z80 microcontroller, has finally given up the ghost and is to be sold to IXYS, a power semiconductor and mixed signal vendor that is one of the fastest growing semiconductor companies. The $62m deal is expected to be completed by March next year as IXYS expects the microcontroller market to take off again next year.
The combination of the two companies with complementing technologies will allow IXYS and Zilog to leverage analogue power management with digital control. Zilog has a focused MCU business with technologies that will complement IXYS’ product portfolio. IXYS has a broad based and diversified range of products geared toward industrial, telecommunications, medical, automotive, alternative energy and consumer applications. By introducing MCUs that enable digital power management and embedded control, IXYS will be able to create more cost-effective system integration solutions for its diversified customer base.
“As the world migrates toward SoCs, Zilog’s core microcontroller technology along with IXYS’ core power solutions create entirely new products that will meet the needs for today and tomorrow,” said Dr. Federico Faggin, Chairman of the Board and the co-founder of Zilog, Inc.

“We are pleased with this strategic acquisition that will allow us to penetrate more applications in traditional and developing markets, leveraging both of our strengths. Digital power management is one of the fastest growing applications in the markets we serve. Zilog’s 35-year history in microcontrollers with its legendary Z80 and Z8 architectures parallels IXYS’ pioneering technologies in power MOSFETs, IGBTs and HVICs,” said Dr. Nathan Zommer, CEO and Founder of IXYS Corporation. “With the expected rebound in MCU sales in 2010, we anticipate a growth in opportunities for refined power control in many applications; the acquisition and integration of this MCU business will strengthen our position and allow us to take advantage of these opportunities. We believe this transaction will create further value for our shareholders, employees and customers through a further expansion and diversification of our product offerings. As it is one of the pioneers of MCUs in Silicon Valley, we plan to keep the Zilog entity with its recognized and valued trademark.”
“Zilog has actively explored a broad range of strategic alternatives to enhance shareholder value. The price that IXYS is proposing to pay is a premium to our current stock price, as well as a substantial premium to the average of the prices at which we’ve traded throughout 2009,” said Darin Billerbeck, Zilog’s president and chief executive officer. “This acquisition brings liquidity to our shareholders, while increasing our financial stability in these continuing uncertain economic times.”

IXYS expects to increase its penetration in the automotive electronic and electric market by producing cost-effective integrated product offerings, including the power semiconductors, driver ICs and Zilog MCUs that are essential for automotive controls and driving displays. In IXYS’ prime industrial market, IXYS plans to deploy MCUs that are suited for motor control, power control and automation. In the telecommunications and security industries, Zilog’s MCUs complement IXYS’ ICs, which can be deployed in modems, VOIP, FIOS and automated alarm systems. For the medical market, the Zilog MCU platform complements IXYS’ power and IC products in defibrillators, imaging and diagnostics. Additionally, the recently expanded IXYS products for LED lighting and display, which require digital power control, will benefit in the market from the availability of complementary MCUs. MCU product offerings will be expanded to include low-power and sensing technologies for energy management applications, including smart lighting and intrusion detection.
In addition to expanding market opportunities, the acquisition will allow IXYS and Zilog to pool R&D resources, leverage economies of scale, reduce manufacturing costs and streamline and integrate operational and support costs.

The deal with IXYS will be through Zanzibar Acquisition, a wholly-owned subsidiary of IXYS.

The move ends a selloff of Zilog technology. In February Zilog sold key lines to Maxim and UEI for $31m. Maxim bought Zilog's secure transaction product line that includes the Zatara 32bit, ARM-based microcontroller family for use in payment terminals.
Maxim and UEI jointly purchased the wireless control business, with Mxim taking the microcontroller silicon chip business and supporting intellectual property to combine with its own Infrared (IR) microcontroller family. UEI bought the software portion of Zilog's wireless control product line, which consists of its patents, universal remote database and software, and related assets.

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