Cypress Semiconductor Corp. and Broadcom Limited announced the signing of a definitive agreement under which Cypress will acquire Broadcom's Wireless Internet of Things (IoT) business and related assets in an all-cash transaction valued at $550 million. Under the terms of the deal, Cypress will acquire Broadcom's Wi-Fi, Bluetooth and Zigbee IoT product lines and intellectual property, along with its WICED brand and developer ecosystem. Broadcom's IoT business unit, which employs approximately 430 people worldwide, generated $189 million in revenue during the last twelve months. The acquisition strengthens Cypress's position in key embedded systems markets, such as automotive and industrial, and establishes it as a leader in the high-growth consumer IoT market, a segment that includes wearable electronics and home automation solutions.
The same day, Advanced Semiconductor Engineering, Inc. and Deca Technologies, a subsidiary of Cypress Semiconductor Corp. today announced the signing of an agreement whereby ASE will invest $60 million in Deca and will license Deca's M-Seriesâ„¢ Fan-out Wafer-Level Packaging (FOWLP) technologies and processes. As part of the agreement, ASE and Deca will jointly develop the M-Series fan-out manufacturing process and will expand production of chip-scale packages using this technology. The technology is required for the reduced size and power consumption needed for portable Internet of Things (IoT) applications and smartphones. Deca's version of it uses autoline technology developed by SunPower to decrease cost and manufacturing cycle time.
The Broadcom transaction, which has been approved by the board of directors of Cypress and Broadcom, is expected to close in the third calendar quarter of 2016, subject to customary conditions and regulatory approvals. Cypress expects the transaction to be accretive within a year of closing and to improve its gross margin, earnings and long-term revenue potential.
"Cypress is a significant player in the IoT today because of our ultra-low-power PSoC programmable system-on-chip technology, but we've only been able to pair it with generic radios so far. Now we have the highly regarded Broadcom IoT business--state-of-the-art Wi-Fi, Bluetooth and Zigbee RF technologies--that will transform us into a force in IoT and provide us with new market opportunities as well," Cypress President and CEO T.J. Rodgers said. "What we bring to the party is over 30,000 customers worldwide who need advanced, ultra-low-power wireless communication but only can absorb it in the form of an easy-to-use programmable embedded system solution."
"We are thrilled to be joining forces with Cypress to address the fast growing IoT market," Broadcom IoT General Manager Stephen DiFranco said. "With our IoT connectivity products, Cypress will be able to provide the connectivity; the MCU, system-on-chip, module and memory technologies; and the mature developer ecosystem that IoT designers require, creating an end-to-end portfolio of embedded solutions and a single IoT design platform."
Under the terms of the deal, Broadcom will continue to focus on its wireless connectivity solutions for the access and mobility segments that are not IoT related, including serving set-top box, wireless access, smartphone, laptop and notebook customers. Cypress will capitalize on the rapidly growing Wi-Fi and Bluetooth connectivity (17% per year(1)) markets in consumer, industrial and automotive IoT segments.
"The robust, ready-to-scale WICED brand and developer network of module makers, value-added resellers (VARs), technology partners and ODMs who are already working with its technology will give us immediate revenue growth capability in new channels," Rodgers said. "Cypress will continue to support and grow this network and to provide it with future generations of innovative, disruptive connected products. Cypress will also bring these new technologies to the automotive market, where we are already No. 3 worldwide in microcontrollers and memories, and where the connected car boom has just started."
Referring to the second transaction, T.J. Rodgers, Chairman of the Board at Deca Technologies and president and CEO of Cypress Semiconductor Corp. commented: "At Cypress we have experienced the efficiency of Deca's M-Series technology with our own chips and brought its benefits to our customers. With this investment from ASE, Deca now has strong validation of M-Series as a technology that will bring fan-out wafer-level packaging to mass production. This deal is a significant proof point for Deca and for Cypress's ongoing strategy of investing in startups as part of our Emerging Technologies Division."
The ability to put more functionality on ever-shrinking semiconductors, also known as Moore's Law, is causing an unintended consequence in the semiconductor packaging industry, where chips using advanced silicon technologies are so small that all of the input and output balls cannot fit on the surface of the chip using conventional wafer-level chip-scale packaging (WLCSP) technology. Deca's M-Series addresses this challenge with a FOWLP approach, where very small silicon chips are embedded into a larger plastic chip, and the CSP balls are redistributed onto both the native silicon chip and the expanded plastic chip. M-Series enables industry-leading manufacturability for FOWLP using Deca's proprietary Adaptive Patterning(TM) technology, which tracks the alignment of each silicon IC in the redistributed plastic package. ASE has found M-Series to be a viable and effective high-volume manufacturing FOWLP solution.
"With the increasing demands to improve performance and reduce package size from the smartphone market and the emerging demand for IoT, the industry has been looking for a FOWLP technology with true manufacturability," said Chris Seams, CEO of Deca Technologies. "Deca is excited to have ASE select our patented M-Series technology to meet this challenge. By leveraging ASE's large customer base and world-class manufacturing expertise, we can bring FOWLP processing to high-volume reality."
Deca's fan-out wafer level packaging technologies will add to ASE's advanced packaging portfolio, providing customers with a more diverse selection of offerings that are best suited for their IC designs. "Today's announcement is a major milestone in ASE's FOWLP roadmap and demonstrates ASE's continued pursuit in industry leadership to build a complete manufacturing eco-system with key partners," said Dr. Tien Wu, COO, ASE Group. "The incorporating of Deca's M-Series and Adaptive Patterning technologies and manufacturing process will enable ASE to offer customers a proven FOWLP solution that is cost-effective due to the efficiency of large-panel-based processing."
The proposed investment by ASE is subject to the various regulatory approvals or consents including but not limited to the approvals of the Taiwan government.
