Cypress Semiconductor Corp. (Nasdaq: CY) today announced it has sold the subsidiary that owns its semiconductor wafer fabrication facility in Bloomington, Minnesota to SkyWater Technology Foundry for $30 million. Backed by Minnesota-based holding company Oxbow Industries, LLC, SkyWater Technology has purchased the capital stock of the subsidiary and will operate the fab as a standalone business that will manufacture wafers for Cypress and for other semiconductor manufacturers. The transaction allows Cypress to reduce its manufacturing footprint and cost structure while increasing the utilization of its Fab 25 in Austin, Texas, in line with the company’s plan to improve gross margins. Seattle-based ATREG, Inc. acted as Cypress’ advisor in this operational fab sale.
“This transaction demonstrates our commitment to reshape Cypress and improve gross margin, in line with our long-term financial model,” said Hassane El-Khoury, Cypress President and CEO. “The sale of Fab 4 in Minnesota allows us to reduce our manufacturing costs as we exit the fab while using the proceeds to pay down debt. We will also be able to improve the utilization and efficiency of Fab 25 in Texas, into which we have been transitioning products over the last 18 months. We believe this agreement represents another milestone in our path to achieving higher gross margins.
“In addition to looking at a potential deal’s impact on Cypress’ bottom line, we set out to ensure uninterrupted supply for our customers,” continued El-Khoury. “This agreement allows Cypress to maintain uninterrupted wafer supply for our products manufactured at the fab, with no disruptions for our customers, and it gives our former employees in Minnesota the opportunity to help the new business flourish and continue the fab’s tradition of quality U.S.-based manufacturing.”
“Given the proven history of efficiency at Fab 4, the expertise and dedication of its workforce and its established success in delivering specialized wafers on time to a diverse customer base, the SkyWater management team sees a strong foundation for growing a standalone business,” said Dr. Scott Nelson, Chief Technology Officer of SkyWater Technology Foundry. “We are committed to continuing the fab’s support of Cypress and its customers with superior quality and on-time delivery.”