The purchase will give Fairchild an engineering center as well as high-volume bipolar and power MOS wafer-fabrication facilities in Bucheon, South Korea. Fairchild will also get assembly and test services associated with the Power Device Division, along with a worldwide sales and marketing team of about 1,200 employees, according to Kirk Pond, president and chief executive officer of Fairchild, based here.
From Samsung Electronics' perspective, the transaction will let the company's semiconductor unit concentrate on its core competencies in memory and ASICs.
The pending acquisition is part of Fairchild's strategy of building and maintaining strength in the multimarket IC and semiconductor components industry, which Pond said accounts for a $35 billion to $40 billion slice of the semiconductor industry.
"Everyone else is saying they're a systems-on-a-chip company," said Pond. "We are not; we're proud to be a multimarket supplier."
The Samsung Power Device Division's lineup includes IGBTs, high-voltage DMOS MOSFETs, motor control ICs and such standard linear components as voltage regulators and op amps. At first blush, the pending acquisition appears to complement the analog and power businesses Fairchild entered when it acquired Raytheon Corp., which had gained a position in the burgeoning market for Pentium core voltage controllers for PCs. But the acquisition would actually position Fairchild more firmly in the consumer and industrial markets.
Raytheon had strength in the low-voltage power-device market (below 100 V, and usually below 50 V), said Pond. By contrast, the Samsung Power Device Division's products generally operate above 100 V, making them suitable for such consumer and industrial products as TV video deflection amplifiers, offline switching power supplies and industrial lighting controls.
Indeed, as a leading manufacturer of consumer televisions and VCRs, Samsung Electronics could become a volume customer for Fairchild's newly acquired products, said Pond.
He said the acquisition would be financed by money raised with the help of CS First Boston.
Citicorp's Venture Corp. and former parent National Semiconductor Corp. remain equity shareholders in Fairchild Semiconductor. The company logged revenue of $135.1 million for the quarter ended Aug. 30, down from $158.7 million for the same period last year. The Samsung acquisition would make Fairchild a $1.1 billion company, Pond said.
Though multimarket IC components represent a commodity market with mature products and competitive pricing, growth opportunities could be substantial, said Jim Liang, senior analyst for analog and mixed-signal ICs at Dataquest Inc. (San Jose, Calif.). Before the current market slowdown, Liang had identified power management as a major driver for linear-IC growth and had projected growth rates of 12 percent for PC power-management devices, compared with 5 percent growth in the analog market overall.
According to Dataquest, Samsung held 4 percent of the $1.6 billion voltage-regulator market in 1996 and 3 percent of the overall linear component market that year.