Microsemi is on a power trip. The company makes power management semiconductors that regulate and condition electricity to make it more usable by electrical and electronic systems. Its products include discrete components, such as diodes and rectifiers, along with integrated circuits, such as amplifiers and voltage regulators. Microsemi also makes devices for pacemakers, GPS products, LCD TVs, and wireless networks. The company's high-reliability semiconductors go into jet engines, missile systems, oilfield equipment, and satellites. Top customers include Boeing, Dell, Honeywell, Medtronic, Boston Scientific, and Lockheed Martin. More than half of sales come from outside the US.
Microsemi's sales increased 14% for 2010 compared to 2009, driven by growth in products for the security and defense markets, as well as an increase in sales for the enterprise and commercial markets as consumer and business demand rebounded. For 2009, sales decreased by 12% as the global economic downturn negatively affected sales in both its enterprise and commercial, and industrial and alternative energy, markets. The company returned to profitability in 2010, reporting net income of $59 million in spite of higher operating expenses for the year. In 2009, Microsemi had a net loss of about $27 million, due in part to higher restructuring and severance charges, along with impairment charges related to facility closures.
While maintaining its traditional strongholds in businesses such as military and aerospace equipment (about 40% of sales are to businesses that have the US government as their main customer), Microsemi is targeting niche commercial markets for growth. Some of the markets identified by the company include the automotive, digital media, GPS navigation, medical, and wireless communications industries. The company is looking to develop more high-margin products for emerging industries, such as alternative energy, to reinforce growth in its core markets.
As snother part of its growth strategy -- even during tough economic times -- Microsemi makes acquisitions that add to or expand its product lines. In 2011 the company bought AML Communications in an all-cash transaction valued at about $28 million. AML makes microwave amplifiers and subsystems used in defense electronics and wireless communications, two markets Microsemi has targeted for growth. Later that year, Microsemi acquired ASIC Advantage, a privately held maker of mixed-signal integrated circuits for the aerospace, automotive, communications, industrial, and medical markets. The purchase expanded Microsemi's reach in key markets with a complementary portfolio of products. Also that year, it bought millimeterwave technology and related assets from Brijot Imaging Systems, to be incorporated in imaging wands for touchless security procedures.
The year has also included a heated play for Zarlink Semiconductor, for which it made a number of unsolicited bids that were rebuffed as inadequate. It finally found success with a purchase price of $525 million. The deal gave Microsemi increased coverage in the communications and medical markets.
In 2010 the company acquired Actel, a maker of field programmable gate arrays (FPGAs), in a transaction valued at around $430 million. Actel became Microsemi's SoC Division. With clients that overlap in the defense and communications sectors, Microsemi plans to bundle the company's chips with its own power management chips and cross-sell more products and services to the shared customer base. Geographically, the acquisition gives Microsemi a presence in Russia and expands its operations across Europe.
Earlier the same year, the company purchased White Electronic Designs (semiconductor design, assembly, and test integration for military/aerospace applications) for about $163 million in cash. It also bought the assets of Atlanta-based VT Silicon, expanding its radio-frequency (RF) product line to include options for WLAN and WiMax wireless networking protocols as consumer demand for a broader selection of mobile devices such as smartphones continues to grow.
Finally, in a deal that further bolstered its US Defense Department (DoD) business, Microsemi bought the Arxan Defense Systems subsidiary of Arxan Technologies in 2010. Arxan Defense Systems makes the EnforcIT software and firmware platform that defense contractors use to protect their systems against piracy, reverse engineering, tampering, and other threats. EnforcIT is specifically designed for defense contractors building major weapons systems. Arxan Defense's software platform, when combined with Microsemi's integrated chips and subsystems, added additional layers of security for those customers and gives Microsemi a broader range of complementary products for its defense portfolio.
Microsemi has manufacturing operations in China, France, Ireland, and the US. The company sells directly and through global sales representatives and distributors. It has sales offices in China, France, Hong Kong, Ireland, Israel, Japan, Macau, South Korea, Taiwan, and the US. – less