Tuesday September 08, 2009

Advanced Technology Investment Company (ATIC) of Abu Dhabi to buy Chartered Semiconductor for US$3.9 billion

channelnewsasia.com :

An Abu Dhabi investment firm has offered to buy Singapore's Chartered Semiconductor for US$3.9 billion, which would create one of the world's largest microchip makers. The buyout by Advanced Technology Investment Company (ATIC) comes as chip companies worldwide look to boost sales after being hit hard by the global recession. Chartered is the world's third biggest maker of custom chips, but it has been struggling to catch up with leaders TSMC and UMC of Taiwan.

ATIC is also the main shareholder in Globalfoundries, a joint venture with AMD. ATIC chief executive Ibrahim Ajami said the combined Chartered and Globalfoundries would make them number two in the world, behind TSMC in terms of capacity. ATIC, which is owned by the Abu Dhabi government, wants to buy each Chartered ordinary share at S$2.68 in cash. Singapore's Temasek Holdings, which owns about 62% of Chartered, has thrown its support behind the deal.

- So it looks like Temasek might finally be handing over its "problem child" (not my words) to someone else. The semiconductor chip business is a fast-paced industry, with expensive high-tech equipment that keeps getting obsolete every few months, where margins are razor-thin, where volume is king and the customers fickle, where the smallest mistakes may lead to millions of dollars of damage and lost sales. It's hard to keep ahead of the changing technological landscape with chip features getting ever smaller and the challenges getting ever greater.

It looked to outside observers that Chartered fumbled somewhat in the transition from 90nm to 65nm technology and then from 65nm to 45nm. It's probably a good thing that Temasek is selling off the company to somebody who has deeper pockets (petrodollars) and hopefully better management, who may be able to better pull this off in the long run.

See also :

1. Junk bonds : Chartered Semiconductor debt rating lowered to junk By Fitch
2. Chartered Semiconductor salary cut - all employees pay reduced by 5-10% on economic slowdown
3. Chartered Semiconductor forces block leave, stops bus services, mulls 4-day working week
4. Chipmakers including TSMC, Chartered Semiconductor, SMIC dealt series of blows from global economic slowdown
5. Chartered Semiconductor earnings alert adds to Singapore recession woes

(2009-09-08 13:06:24 SGT) [Biz] Permalink

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