Agilent's semiconductor group spins out as Avago
Since Kohlberg Kravis Roberts & Co. and Silver Lake Partners offered Rs.12,142.9 crores ($2.66 billion) to acquire the group in August, Avago agreed to sell its I/O solutions division to PMC-Sierra Inc. for Rs.1,940.13 crores ($425 million).
Avago chief executive Dick Chang said that the standalone company wants to carve its expertise in hybrid, analog and mixed-signal circuits, where Avago has a loyal customer base stemming back to the pre-1999 period when it was a division of HP.
Avago's CMOS business traditionally has been in image sensors, though it has a formerly captive CMOS mixed-signal ASIC business that moved into competitive accounts after the division moved to Agilent in 1999. That ASIC business has captured some key external customers like Cisco Systems Inc. in recent years, and Chang said the company has every intention of continuing to grow the CMOS ASIC business.
The unit that became Avago saw a slight dip in revenues and profits in fiscal 2005 (net revenue of the unit was Rs.8,217 crores ($1.8 billion) in 2005, down from approximately Rs.9,130 crores ($2.0 billion) in 2004), which Chang said was due in part to OEM inventory build-up in early 2004 that led to corrections in component supply in late 2004 and early 2005.
Jeff Henderson, Avago's SVP of worldwide sales and marketing, said that Avago expects growth in virtually all market sectors in fiscal 2006, particularly in wireless handsets, where Avago can leverage proprietary technologies such as GaAs-based power amps and film bulk acoustic resonator filters, using a unique MEMS-based thin film.
Avago's sales currently are 36 per cent in enterprise IT and data processing, with significant sectors in printer ASICs and optical mouse control; 34 per cent in communications, split almost evenly between wireless (RF and microwave) and wireline (largely optical); 19 per cent in military/industrial/automotive; and 11 per cent in consumer electronics.
- Loring Wirbel