Cypress Semiconductor Considers SunPower IPO

April 20, 2005 by Jeff Shepard

Cypress Semiconductor Corp. (San Jose, CA) reported that its SunPower Corp. solar power cell division was doing so well that the company is considering an IPO for the business in order to continue funding its growth. Cypress has some $250 million on hand to fund the division's $100 million planned manufacturing expansion, but the Cypress board decided taking the company public may be a more efficient means of raising the capital involved.

Chief Executive Officer T.J. Rodgers said the IPO for its SunPower division was a possibility. "It was a decision we made in our board meeting yesterday afternoon. We've decided we're going to begin investigate doing an initial public offering for SunPower. We don't want SunPower to be limited by money."

SunPower is the one bright spot in an otherwise lackluster quarter. The silicon solar cell subsidiary exceeded its revenue target slightly, posting sales of $11 million in the first quarter. That was up 142% from the fourth quarter of 2004, and comprised 6% of Cypress' first-quarter revenue, as SunPower continued to ramp its initial 25 MW manufacturing line in the Philippines. Cypress expects continued growth for SunPower in the second quarter, based on sustained demand for its products and continued progress in the Philippines. The SunPower plan is to break even in the third quarter.

The company is already planning its second 25 MW solar cell production line, which is what is prompting the IPO consideration. The first manufacturing line is debugged, and is seeing consistent yields around 85%. The second 25 MW solar cell manufacturing facility will cost approximately $100 million.