Spansion buys Fujitsu's MCU, analog business

Dylan McGrath  4/30/2013 11:24 AM EDT

LONDON – Flash memory supplier Spansion Inc. (Sunnyvale, Calif.) is set to buy the microcontroller and analog business of Japan-based Fujitsu Semiconductor in a deal valued at about $175 million. 

Under the terms of the deal, Spansion will acquire assets, intellectual property, products and personnel from Fujitsu. But the deal does not include any of Fujitsu's manufacturing facilities. Spansion also announced first quarter sales that came in short of analysts' expectations. 

John Kispert, Spansion's CEO, said the deal positions Spansion to play in a much broader market. "Both sides are very excited about this deal," Kispert said.

Two years ago, when Spansion emerged from bankruptcy as a supplier of NOR flash, the company was serving a total market of about $3 billion, Kispert said. Last year, Spansion inked a deal with SK Hynix Inc. to enable Spansion to offer single-level-cell (SLC) NAND flash devices for the embedded market. Following the completion of the Fujitsu deal, expected to close next quarter, Spansion will be serving a total market worth about $30 billion, Kispert said.

"This [deal] opens up a whole bunch of options for [Spansion]," Kispert said. Among other synergies, the acquisition of Fujitsu--which is the No. 2 supplier of microcontrollers to Japan's automotive market--will give Spansion an in with Japan's massive auto industry, Kispert said. The deal also gives Spansion the technology to offer embedded SoCs with processing, memory and analog functionality, he added. 

"This acquisition provides incremental revenue and aligns with our strategy to expand into system-on-chip solutions that require leadership in embedded flash technology," Kispert said. 

As a condition of the deal, Fujitsu will continue to build its legacy parts for Spansion at its fabs in Japan for the next two years, Kispert said. Those fabs have been widely seen as in danger of closing as Fujitsu moves to restructure and largely disengage from the semiconductor business (see Fujitsu chip business faces radical restructure). It was been widely reported that one or more of the major foundry companies could be interested in acquiring those fabs. 

Spansion said it would combine its flash memory technology with  microcontroller and analog products to accelerate the development of system-on-chip ICs for use in the Internet of everything for automotive, industrial and consumer applications. 

Kispert said the deal, once closed, will be immediately accretive to Spansion's earnings. The net impact is expected to benefit Spansion's financial results in 2013 and the deal is part of a previously announced restructuring at Fujitsu.

The purchase price includes about $110 million for assets and intellectual property plus about $65 million for inventory. The cost of the inventory is subject to change due to fluctuations in inventory volume and value. The deal is subject to various customary closing conditions and is expected to be complete in the third calendar quarter of 2013. 

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