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Monday, January 10, 2011

Conexant sold off to SMSC

Creates group with 900 mixed signal engineers
By Nick Flaherty

How are the mighty fallen. The once powerful embedded chip maker Conexant Systems - spin off of Rockwell and dominant supplier of modem chips - is to be sold off to up and coming chip maker SMSC of New York.
Conexant leaves the industry with a string of legacies through a number of spin offs, from foundry Jazz to telecom chip maker MindSpeed, but the core of chips for imaging, audio, embedded modem, and video surveillance applications will go to to SMSC in a deal valued at approximately $284 million including the assumption of Conexant’s net debt. The transaction has been approved by the boards of directors of both companies.
The company had been selling off parts of the business for several years, and last month sold property next to its Newport Beach, California, headquarters for $23m

Combined Company Highlights:
  • Creates a stronger analogue/mixed-signal R&D team with over 900 engineers globally,
  • Complementary connectivity product portfolios to target more expansive set of computing, consumer, industrial and automotive applications,
  • Serves key customers with more complete product solutions,
  • Combined company has the scale and resources to enhance SMSC’s finances with a combined revenue of $632m,
  • Anticipated cost cutting of $8 to $10m by the end of SMSC’s fourth quarter
The combination of Conexant’s imaging, audio, embedded modem and video products with SMSC’s broad connectivity solutions targeting the computing, consumer, industrial and automotive markets provides for a highly complementary merger of talent and technology. Conexant has approximately 600 employees worldwide, including over 230 in Asia.
“We believe that combining the growth potential of Conexant and SMSC will allow us to leverage complementary technology and engineering resources to provide our customers with expanded solutions in connectivity and content,” said Christine King, President & Chief Executive Officer of SMSC. “We plan to focus our resources on the areas of highest return and believe that our respective sales and supply chain relationships will help create a platform to grow our businesses. In addition, we expect to capture significant operating efficiencies that will position us to increase earnings growth. SMSC’s larger scale should position us to increase our R&D productivity and drive profitability and shareholder value.”
“In our industry, size and scope provide a significant advantage with customers and suppliers," said Scott Mercer, Conexant's Chairman and Chief Executive Officer. "SMSC and Conexant share similar core competencies in analog and mixed-signal design, possess complementary product portfolios, and count many customers in common. By joining forces, we get the opportunity to take advantage of economies of scale and drive profitable growth."
Sailesh Chittipeddi, currently President & Chief Operating Officer at Conexant, will join SMSC upon close of the acquisition as Executive Vice President, reporting to Christine King. Mr. Chittipeddi’s responsibilities will include all product lines and global marketing and engineering functions for SMSC.

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