Wednesday, July 26, 2006

New owner...who?

Motorola-->Freescale, Agilent-->Avago, Infineon-->Qimonda, Philips Semiconductor-->?

I read an article today, 26 July 2006, that a trio of private equity firms are now jostling for position to be the new owner of Royal Philips Electronics' semiconductor division. As a separate entity, it was reported that the semiconductor unit would be the world's 11th largest chipmaker, and third in Europe behind Infineon Technologies AG and STMicroelectronics NV. Initial reports indicated the company had wanted to sell the unit outright, but apparently found no takers, or at least not at an agreed-upon price -- estimates showed that the unit would be worth about USD7.6 billion. "...the logical step was to find a partner and this appears to have failed..." quoted from various sources.

With some urge to speculate who will be THE new owner, I checked out the portfolios of the 3 groups of bidders.

Group A: Kohlberg Kravis Roberts & Co. (New York, NY) with Silver Lake Partners (Menlo Park, CA).

-Combined portfolio include, but not limited, to Avago Technologies, Inc. and Flextronics.

Group B
: Permira Advisors (London), Texas Pacific Group (Fort Worth, TX),and Blackstone Group (New York, NY).

-Most of their technology investments associate with more unfamiliar names (at least to me) such as FyreStorm, Covi Technologies and Aristos Logic.

Group C
: Bain Capital Inc. (Boston),Apax Partners Worldwide LLC (London), and Francisco Partners Management LLC (Menlo Park, CA).

-Portfolio include ChipPAC, Wisair, CGS SOlar, AMI Semiconductor and MagnaChip Semiconductor.

Group A and C seem to have more investment experiences related to semiconductor manufacturing/fabrication technologies. Well, Avago is a semiconductor spin-off from Agilent, but I believe their specialization is more into LED chips. Group C's Wisair is a provider of Ultra WideBand(UWB) and Wirelss-UWB(W-UWB) chipset solutions; and CGS Solar, a manufacturer of solar modules. Not close enough to IC manufacturing and business. But they have ChipPAC, AMI Semiconductor and MagnaChip Semiconductor (formerly Hynix Semiconductor's System IC Busines). Group B's FyreStorm is a fabless semiconductor that develops power management technologies; Covi, a video surveillance company; and Aristos Logic that works on storage processor for network storage.

Well, not as hard as guessing who will reign supreme in "The Apprentice, Part X", "The Amazing Race, Part Y", "Treasure Hunters"...also not as tough to guess where are the big big bucks in "Deal or No Deal".

What is your bet on this ? You ask about mine ?
I to guess.

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