On Semiconductor Acquires Cypress Semiconductor Image Sensor Business

The latest amongst the long list of semiconductor acquisitions that ON Semiconductor (Nasdaq: ONNN) has made, is Cypress Semiconductor's (Nasdaq:CY) image sensor business unit for approximately $31.4 million. The all-cash deal is expected to close by the end of the first quarter, subject to customary closing conditions.

Cypress's portfolio comprises image sensors is used in multi-megapixel digital photography and cinematography, linear and 2D bar code imaging, medical x-ray imaging, aerospace applications, linear and two dimensional (2-D) bar code imaging and Biometrics.

"The acquisition of the Image Sensor Business Unit from Cypress will solidify our position as a leading supplier of CMOS Image Sensor products," said senior vice president and general manager of ON Semiconductor's Digital and Mixed Signal Group (DMSG), Bob Klosterboer. The deal is expected to bolster ON's products for the industrial, medical, computing and military/aerospace markets.

The new unit will become part of ON Semiconductor's Digital, Military/Aerospace and Image Sensor (DMI) division. Under the agreement, ON is expected to acquire approximately 100 patents and patent applications.

As part of the deal, approximately 80 Cypress Semiconductor employees will join the ON Semiconductor organization.

On Semiconductor’s current products target one dimensional image sensing with particular focus on contact image sensing and ambient/proximity sensors. Once the acquisition is closed, the company will have a complete image sensing product offering between 1-D and 2-D sensors and across multiple end-markets.

“The sale of our image sensor business will enable Cypress to continue to focus on programmable products including our flagship PSoC programmable system-on-chip solution and our TrueTouch touch-sensing controllers,” said T.J. Rodgers, Cypress president and CEO, in a statement.

Meanwhile, following its spin-off from Motorola Inc., ON Semiconductor had acquired Cherry Semiconductor Corp. for $253.2 million. Then, starting in 2006, the company, directed its efforts towards reshaping the company from a commodity discrete supplier into a higher-value analog/mixed-signal vendor.

Several years ago, it raised eyebrows by buying LSI Corp.'s 8-inch fab in Gresham, Oregon for $106.5 million. In 2007, it acquired AMI Semiconductor for $894.1 million. The move enabled ON Semiconductor to enter the ASIC, custom chip, foundry and other markets. At about the time, it also purchased Analog Devices Inc.'s voltage regulation and thermal monitoring products for $148 million.

Then, in 2008, ON Semiconductor went on to purchase Catalyst Semiconductor Inc., a supplier of EEPROMs and related non volatile memories, for $121.7 million. Continuing on its buying spree, ON Semiconductor recently completed the acquisition of EMI chip specialist PulseCore Holdings (Cayman) Inc. for $17 million.

In 2009, On Semiconductor acquired California Micro Devices for $108 million in cash under the terms of a definitive agreement signed by the two companies. In an effort to expand into medical chips, ON Semiconductor last year acquired privately-held Sound Design Technologies Ltd. (SDT) from an affiliate of Global Equity Capital LLC, for approximately $22 million in cash.

In July of last year, Sanyo Electric Co. Ltd. has agreed to sell its loss-making semiconductor subsidiary to On Semiconductor for $366 million in a mix of stock and cash.

On Semiconductor recently announced that total revenues in the third quarter of 2010 were $600.7 million, an increase of approximately 3 percent from the second quarter of 2010.  During the third quarter of 2010, the company reported GAAP net income of $87.8 million, or $0.20 per fully diluted share.

The third quarter 2010 GAAP net income included net charges of $20.0 million, or $0.05 per fully diluted share, from special items. Also included in the operating expenses during the third quarter of 2010 was approximately $5 million of acquisition related expenses.  During the second quarter of 2010, the company reported a GAAP net income of $78.7 million, or $0.18 per fully diluted share.

Cypress reported a GAAP net income of $9.1 million, or 5 cents per diluted share, for the fourth quarter.For the fiscal year 2010, Cypress posted total non-GAAP1 revenue of $883.8 million, an increase of 32 percent from fiscal 2009. On a GAAP basis, Cypress posted total revenue of $877.5 million, an increase of 3 percent from fiscal 2009, the company said.

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