ON Buys LSI Fab to Produce Digital Power Devices

April 06, 2006 by Jeff Shepard

ON Semiconductor Corp. has executed a definitive agreement with LSI Logic Corp. to purchase LSI's Gresham, Oregon, wafer fabrication facility and certain other semiconductor manufacturing equipment for a total of approximately $105 million in cash. The assets to be purchased include an approximately 83 acre campus with an estimated 500,000 square feet of building space of which approximately 98,000 square feet is clean room. The 200 mm capable tool-set and equipment included in the transaction is currently capable of producing 18,000 8-inch wafers per month.

"The purchase of the Gresham 8-inch wafer facility will accelerate our technology roadmap -- enabling ON Semiconductor to develop a larger mix of high-performance submicron analog and digital power products," said Keith Jackson, ON Semiconductor's president and CEO. "We currently own and operate 4-inch and 6-inch wafer fabrication facilities throughout the world and the capabilities of the Gresham 8-inch facility are consistent with our commitment to our customers to supply state-of-the-art technology in high volumes and at a low cost. We expect demand for our submicron high performance products to continue to increase. Securing advance manufacturing capabilities, process development know-how and operational expertise in deep submicron technologies will support our long-term strategic roadmap. The Gresham facility purchase provides us with cost-effective advanced manufacturing capabilities in a much shorter time frame and on more favorable terms than expanding our existing fabrication infrastructure."

"These capital expenditures to expand fab capacity were already part of our current 5-year plan, and the asset purchase of the Gresham facility is just an acceleration of what we had already planned to spend," said Donald Colvin, ON Semiconductor's senior vice president and CFO. "This purchase enables us to introduce new products faster and accelerates our internal capability roadmap, while the supply agreement allows us to offset projected fixed costs."

Pursuant to the agreement, ON Semiconductor will offer employment to substantially all of the LSI Logic manufacturing employees currently working at the Gresham facility. The skilled process development and operational expertise of Gresham's employee base are a critical aspect of the transaction and will help enable ON Semiconductor to produce its own high-volume, low-cost, high-performance analog and digital power products down to 0.18 micron levels, with toolset capabilities down to the 0.13 micron level in the future. ON Semiconductor is truly excited to welcome this very capable team. Longer term, ON Semiconductor believes that the access gained to submicron cell libraries, skilled process development engineers, operational expertise and process development know-how through this transaction will enable ON Semiconductor to expand its portfolio of high performance analog and power products.