TSEM: Panasonic is Selling its Share of TPSCo to Nuvoton as of June 1, 2020

By Lisa Thompson

NASDAQ:TSEM

READ THE FULL TSEM RESEARCH REPORT

As the result of the corporate-wide strategy of Panasonic Corp. to purge its unprofitable businesses, Panasonic is selling all its semiconductor operations to Nuvoton Technology Corporation for $250 million in cash. This sale includes Panasonic's interest in TPSCo, the joint venture with TowerJazz TSEM. The sale set to happen on June 1, 2020 will keep the current Panasonic contract unchanged with TPSCo. This contract runs through 2022. TowerJazz say there will be no impact on its business relationship between its foundry customers, or on the manufacturing of any wafers in any of its fabs. We are not changing any estimates based on this sale. Nuvoton is a public company, based in Taiwan and a subsidiary of Winbond Electronics Corporation, who owns 62% of the company.

According to Nuvoton's press release, it believes this acquisition will generate greater value for customers and shareholders and will:

• Increase Nuvoton's presence in the global semiconductor industry through greater scale and volume of semiconductor solutions;

• Position Nuvoton well to capture secular growth trends in the electrification and automation of automotive and industrial fields;

• Broaden Nuvoton's distribution channels and customer base to explore cross-selling opportunities; and

• Strengthen Nuvoton's technology platform via deeper R&D resources and a broader intellectual property portfolio.

In 2018, Nuvoton generated $329 million in revenues and was profitable. It is a digital/analog/mixed signal semiconductor company, and has leading positions in microcontrollers, microprocessor, audio, computer, and cloud computing IC applications. Nuvoton has subsidiaries in the US, Mainland China, Israel, and India.

Its portfolio includes:

• Computer: Super IO (SIO), Embedded Controllers (EC), Trusted Platform Modules (TPM), Power Management among others. It is one of the world's top three suppliers of Super IO, Embedded Controllers, and Trusted Platform Modules for the PC industry.

• Microcontrollers: ARM® Cortex™ M0 plus ARM® 7/ ARM® 9 with others in development plus 8051 families. It is a leader in microcontrollers with its new fast growing portfolio of ARM® Cortex™ microcontrollers plus a family of 8051 products. These families currently include a wide range of ARM® controllers including Cortex™ M0, ARM® 7/ ARM® 9.

• Mixed Signal: Speech Playback and Record Products with embedded Flash. Audio Products including Power Amplifiers, Audio ADC's/DAC's and CODECS. It also has extremely high fidelity solutions for speech recording/playback and full range audio applications that serve consumer, automotive, white goods, and other markets.

We are not changing any estimates based on this transaction.

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