By Courtney E. Howard
AUSTIN, Texas—Technology companies delivering embedded solutions to military and aerospace customers, among others, are acquiring businesses entrenched in the consumer electronics markets. Two companies in as many months have revealed acquisition agreements.
Freescale Semiconductor, a privately held, global designer and manufacturer of embedded semiconductors, is acquiring SigmaTel Inc., a fabless semiconductor company. Both companies are in Austin, Texas.
The agreement, which is expected to close in the second quarter of fiscal year 2008, involves a stock purchase representing approximately $110 million in cash.
“The SigmaTel acquisition enhances the long-term, strategic value we can deliver to our customers,” explains Lynelle McKay, senior vice president and general manager of Freescale’s Networking and Multimedia Group.
Freescale Semiconductor provides embedded semiconductors to the mil-aero, automotive, industrial, networking, and wireless markets. One of the largest semiconductor companies, Freescale boasts design, research-and-development, manufacturing, and sales operations in more than 30 countries and 2007 sales of $5.7 billion.
SigmaTel personnel design, develop, and market analog intensive, mixed-signal integrated circuits (ICs) for digital multimedia applications. Serving the consumer electronics market, SigmaTel delivers complete, system-level solutions that include integrated ICs, customizable firmware and software, software development tools, and reference designs. The company’s focus is on enabling customers to rapidly introduce and offer compact, power-efficient, reliable, and cost-effective electronic products.
“The increased demand for feature rich, always-connected consumer electronics devices is driving manufacturers to look for platform-based solutions that will accelerate time to market,” says Phil Pompa, president and CEO of SigmaTel. With the addition of SigmaTel, he says, Freescale is the obvious choice for these next-generation devices.
Similarly, in January of this year, Emerson Network Power, an Emerson business located in Tempe, Ariz., completed the acquisition of Motorola’s Embedded Communications Computing (ECC) group in Tempe, Ariz. The transaction was valued at $350 million in cash.
Motorola’s ECC business focused on the supply of embedded computing products and services to communication infrastructure and equipment manufacturers in telecommunications, defense and aerospace, medical imaging, and industrial automation. With a staff of 1,100, Motorola’s ECC business achieved roughly $520 million in revenue in 2006 and helped drive open standards since its formation in 1980.
“The addition of Motorola’s product portfolio and customer base strengthens Emerson’s existing embedded computing business,” says Jay Geldmacher, executive vice president, Emerson. “We anticipate a bright future, one where Emerson Network Power will drive the continued evolution and growth of the embedded computing market.”
Emerson Network Power’s Embedded Computing business has absorbed the long-time Motorola entity. The division focuses on bringing to market industry-leading solutions based on open standards, including AdvancedTCA, MicroTCA, CompactPCI, and VMEbus, for equipment manufacturers in the defense, aerospace, industrial automation, telecommunications, and medical diagnostics markets.
Customers in the embedded computing industry, especially the mil-aero segment, are increasingly adopting industry standards, including ATCA, MicroTCA, and AdvancedMC. Some analyst firms forecast xTCA products to be a multibillion-dollar market by 2010, says an Emerson Network Power representative. More than 40 percent of network equipment providers are said to be shipping ATCA-based systems.
“We believe the whole industry will benefit from this transaction—from customers and prospects to partners, suppliers, and industry organizations,” notes Earle Weaver, group vice president, Emerson, with responsibility for the Embedded Computing business. “We intend to focus Emerson’s considerable resources on developing advanced embedded computing technologies and delivering integrated, single-source solutions using our expertise to drive the adoption of common platforms that benefit this market.”
Although industry consolidation seldom brings good news for the customer, this is an instance in which mil-aero end users are likely to benefit from greater and faster accessibility to the latest embedded innovations in consumer electronics.
For more information, visit Freescale Semiconductor, SigmaTel, and Emerson Network Power online at www.freescale.com, www.sigmatel.com, and www.emersonnetworkpower.com, respectively.