Acquisitions Herald Changes Across Power Electronics Industry

Nov 1, 2006 4:05 PM
by David Morrison, Editor, Power Electronics Technology

The ongoing trend toward consolidation in the power electronics industry continues unabated as indicated by recent announcements from power semiconductor and power system suppliers. In just the past two weeks, a series of deals have changed the business landscape for component suppliers and their customers. The latest news includes Vishay’s purchase of IR's Power Control Systems Business and the acquisition of American Power Conversion by Schneider Electric. These announcements come on the heels of Microsemi’s acquisition of PowerDsine and the sale of APD Semiconductor to Diodes Inc.

Earlier today, Vishay Intertechnology (www.vishay.com) and International Rectifier IR) (www.irf.com) announced they have reached an agreement for the sale of IR's Power Control Systems (PCS) business to Vishay. The PCS business includes IR's Non-Focus Products business and certain product revenue from its Focus Products business, including certain discrete planar MOSFETs, discrete diodes and rectifiers, discrete thyristors, and automotive modules and assemblies.

The PCS business accounted for revenue of approximately $300 million, or 26% of revenues in IR's June-ending fiscal year 2006. The PCS business is expected to be sold for approximately $290 million in cash. The agreement is subject to customary closing conditions. Signing of definitive agreements is expected to take place by November 10, 2006. The transaction is expected to close in February 2007, at which point IR plans to update its website to reflect the specific changes that will be made in its product portfolio.

This divestiture enables IR to concentrate its resources on its Focus Products business, which includes high-performance analog, digital, and mixed-signal ICs, and other advanced power management products. Earlier this year, the company announced it was exploring the potential sale of its Non-Focus Products business, which includes both its Non-Aligned Products and its Commodity Products segments.

A presentation available on the Investor Relations page of the IR website, provides some clues as to how the sale of the Non-Aligned Products and the Commodity Products segments will affect IR’s focus on specific application areas. The presentation, which is posted at www.irf.com/investor/IRF_investor_presentation.pdf, indicates that these two business segments are separate from the company’s Computing & Communications, Energy Saving Products, Aerospace & Defense, and Intellectual Property segments. Therefore, the sale can be interpreted as an effort to focus more heavily on these four business segments.

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