Microsemi Forms 2 Joint Ventures With Taiwanese

SANTA ANA —  Microsemi Corp., a manufacturer of custom semiconductor chips, has formed two joint ventures overseas to continue its expansion into high-volume manufacturing of commercial semiconductor components.

“This is the next major step toward our plan of establishing Microsemi as a major player in the worldwide commercial market,” said Philip Frey, chairman and chief executive of the company.

In the past, Microsemi focused on making high-priced, highly reliable semiconductor components such as devices for missile guidance systems for the military or customized electronics for heart pacemakers for the medical market.

But now it will also take the technology developed for the sophisticated markets and apply it to general commercial markets such as electronics for microwave ovens, said David Lloyd, general manager of the company’s commercial subsidiary, which was created in January.

“We’re going into the low-end commercial business that is sometimes called the ‘jellybean’ business because they are the electronics that go into things like electric shavers,” Lloyd said. “We believe it is a half-billion market opportunity.”

To form the joint ventures, called Microsemi Manufacturing Taiwan and Microec tron Ltd., Microsemi teamed up with Rectron Ltd., a Taiwanese electronics manufacturer, and other Taiwanese investors, Lloyd said. Microsemi will invest $1 million in the ventures, which will be based in Rectron’s factory.

Under the agreements, Microsemi will fabricate commercial chip wafers in Santa Ana and elsewhere in the United States. The wafers will be shipped to Taiwan, where they will be cut into individual chips and assembled into working electronic parts. The joint ventures will employ roughly 30 to 40 people in Taiwan.

By assembling the commercial products in Taiwan, Microsemi will be able to achieve low costs on its products and nearly double the number of items it can sell in the commercial markets, Lloyd said. No jobs will be lost in Santa Ana, where the company employs 600 people who are primarily involved in manufacturing military electronics products.

“The business potential is extremely substantial, and we hope within four or five years this high-volume business could account for 50% of Microsemi’s product line,” Lloyd said.

The joint-venture companies would bring Microsemi into direct competition with giant commercial chip manufacturers such as Motorola Inc. in Schaumburg, Ill., and General Instruments, in New York.

Microsemi is in the midst of a restructuring in which it is turning its focus to its core business of making semiconductor chips for the aerospace, military, computer, medical and telecommunications industries. As part of the restructuring, Microsemi is negotiating to sell off some non-semiconductor electronics businesses such as a chip-cleaning operation.

For the second quarter ended March 31, the company reported net income of $806,000 on revenue of $20.1 million, contrasted with net income of $214,000 on revenue of $22.4 million for the period a year earlier.