Cypress Semiconductor ( CY) is selling its research and development chip foundry to a pair of private equity firms. The San Jose, Calif., chipmaker, which has been fighting pressure by activist investors to sell the entire company in a leveraged buyout deal, announced Tuesday that it will spin off its Silicon Valley Technology Center for $53 million in cash. Cypress will transfer all the facility's equipment, process technologies and staff to buyers Oak Hill Capital Partners and Tallwood Venture Capital, under the terms of the deal, which is expected to close by early March. Cypress first allowed other companies to buy access to its R&D fab, located at its San Jose headquarters, in 2000, and formalized the operation as the SVTC in 2004. The foundry, which features advanced 300-millimeter wafer processing, allows start-ups and established companies to develop new semiconductor technologies in a shared R&D environment. "With SVTC, Cypress created a unique R&D business model that turned a capital-intensive operation into a profit center and that has enabled many novel silicon technologies to find their way from lab to fab using the SVTC," said Cypress CEO T.J. Rodgers. "With a recent shift in focus to a new mix of programmable products and solutions, Cypress now has very few products requiring 'bleeding-edge' technology, leading us to conclude that we do R&D more cost effectively as an SVTC customer than as an owner," Rodgers said.
The sale of SVTC follows recent verbal jousting between Cypress and Chapman Capital, which owns roughly 1% of Cypress common shares. Chapman Capital has called for Cypress to reorganize the company, preferably through an LBO with private equity firms. Shares of Cypress were up 0.6%, or 11 cents, at $18.37 in midday trading Tuesday.