Intersil to Sell Switch-Making Firm for $338 Million
Intersil Corp., an Irvine wireless communications chip company, said Monday it has agreed to sell its discrete power business--which accounts for 25% of its revenue--to Fairchild Semiconductor International Inc. for $338 million in cash.
About 650 employees and a manufacturing complex in Mountaintop, Pa., will become part of Fairchild. The facility makes small power switches for products ranging from cell phones to automobiles.
The business, which Intersil acquired from General Electric Co. in 1988, accounted for $210 million of Intersil’s revenue last year.
“As we became more focused on communications, it became clear: that piece of the business didn’t fit in,” said Intersil spokesman Brent Dietz. “It is a low-margin, commodity piece of our business.”
The sale completes Intersil’s transition to a company that concentrates on high-speed wireless access and communications analog chips, including a line of products used in wireless home networking.
Total revenue for Intersil’s remaining businesses grew about 50% last year, the company said in a news release. The wireless access division grew more than 200% and is expected to grow an additional 40% this year, the company said.
Intersil’s management and design team set up shop in Irvine last year with about 35 employees. The majority of the company’s 2,650 employees remain in Melbourne, Fla., its previous headquarters.
The deal with Fairchild should become final by the end of March, Intersil said.
Fairchild, based in South Portland, Maine, said the purchase will make it the second-largest supplier of power-management chips with about 20% of the $3-billion world market. Besides giving Fairchild the Pennsylvania design and manufacturing facility, the deal increases its presence in the automotive engine and ignition control markets and gives it a foothold in the aerospace market.
As a result of the sale, Intersil expects to report a onetime gain during the first quarter. The company said it intends to use the proceeds for acquisitions and investments.
Intersil stock rose 25 cents Monday to $29.25 a share on the Nasdaq market. Fairchild stock rose 19 cents to $17.69 a share on the New York Stock Exchange.
