Motorola sells chip division

AIM (Apple, IBM, Motorola) Alliance member Motorola has announced plans to separate its semiconductor operations into a spun-off independently-traded company.

          AIM (Apple, IBM, Motorola) Alliance member Motorola has announced plans to separate its semiconductor operations into a spun-off independently-traded company.

          Motorola's Semiconductor Products Sector (SPS) will become an independent semiconductor company with "its own focused strategy", Motorola says. The company has not finalised details of the transaction, and will "focus its remaining business on communications and integrated electronics products".

          It is not clear if the move will affect Apple's processor supplies. Motorola corporate spokeswoman Jennifer Weyrauch stresses: "We will work diligently to ensure minimum impact on our customers, partners and suppliers. Our objective is to make this a positive change for these key constituents.

          "SPS has its own sales, marketing, brands and so on. There are no shared go-to-market functions – the separation should cause no change from the customer's perspective," she adds.

          Motorola says over the last several years, SPS has "successfully executed an ‘asset-light’ business model that differentiates it from other semiconductor players". Among other moves, the company has outsourced chip production to third-party companies, shut down its own fabrication plants and shed 60,000 employees worldwide.

          Lost ground

          Industry insiders have claimed the division has been working hard in recent years to regain lost ground. SPS has moved to sharing development costs with others, licensing intellectual properties, and launching products in an attempt to become profitable.

          Motorola says: "With its own publicly traded equity, SPS will have the opportunity to pursue acquisitions, should it so choose, of additional strategic product lines and technology using semiconductor equity valuations instead of the blended equity valuation of Motorola. In addition, the semiconductor industry cycle appears to be in an upswing; therefore, Motorola believes the time is right to take these actions."

          The move follows several months of considered thought on how to "optimise" the division's business, according to Motorola chairman and CEO Christopher Galvin. "After completing our four-month-long technology and strategic review on August 1, I recommended Motorola focus on communications and integrated electronic products and the spin-off of the semiconductor business," he says.

          Motorola plans to IPO (initial public offering) a portion of the SPS shares, distributing the remainder to existing Motorola shareholders.

          "We are embarking on the creation of a new company, and we are excited about the opportunity ahead of us," says SPS President Scott Anderson. "We have strategic and productivity initiatives already in place that are driving a sustainable difference in our approach to the semiconductor market."

          PowerPC processor development and manufacture will also be spun-out as part of the SPS IPO, Weyrauch says.

          Motorola's semiconductor sales were $US4.8 billion in 2002.

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