SMIC buys Italian chip foundry

SMIC buys Italian chip foundry

Business news |
By Peter Clarke

The deal marks SMIC’s first expansion of manufacturing beyond China and will also move the company into the global electronics market, SMIC (Shanghai) said.

Tzu-Yin Chiu, CEO of SMIC

Tzu-Yin Chiu, the SMIC’s CEO and executive director, said through a statement that the acquisition marks an important step in SMIC’s global strategy. “In the future SMIC will continue to enhance, strengthen and further expand leadership in the global semiconductor ecosystem,” Chiu said.

LFoundry Europe GmbH, the German parent company of LFoundry, and Marsica Innovation SPA, a group that helps manage the fab in Avezzano, Italy, will each retain 15 percent ownership in LFoundry at the conclusion of the deal, SMIC said. The Avezzano fab was originally built by Texas Instruments.

SMIC is ranked by market research firm Gartner as the fifth largest semiconductor foundry in the world with 2015 revenue of $2.24 billion and a market share of close to 5 percent. SMIC posted its 16th consecutive quarter of profitability in the first quarter of 2016 with sales of $634.3 million.

LFoundry is a specialty foundry focused on analog products targeting automotive, security and industrial applications. The company has a manufacturing capacity of around 40,000 8-inch wafers per month at its Avezzano fab. LFoundry, which is not ranked among the world’s top 10 foundries, posted 2015 revenue of about $243 million.

SMIC and LFoundry said the deal would create greater opportunities for both companies by combining manufacturing capacity and giving each company’s respective products inroads into markets in China and Europe.

“The agreement with SMIC will further enable us to better use our own manufacturing capacity and have access to SMIC’s extremely diverse technology offerings while taking advantage of SMIC’s commercial network and overall capacity,” said Günther Ernst, LFoundry CEO.

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