SANTA CLARA, Calif, March 11, 1998 -- Continuing its migration from PC components into the more lucrative communications realm, Integrated Device Technology Inc. is acquiring logic vendor Quality Semiconductor Inc., based in Santa Clara.
The move demonstrates IDT's belief that it has found a sustainable niche as a supplier of logic and memory chips to the communications market, a target that has become increasingly popular as PC opportunities have dried up.
IDT has shifted its strategy for memories, as cache SRAMs aren't the breadwinner they once were. To that end, the company has begun tailoring memories to communications needs, such as SRAMs for DSP applications or the zero-bus-transfer SRAM designed at the behest of networking OEMs.
Meanwhile, IDT shored up its logic offerings by announcing the acquisition of Quality Semiconductor in a stock swap worth more than $30 million. The merger, expected to close in the first quarter of 1999, would have each share of Quality being exchanged for 0.6875 shares of IDT.
The acquisition fills some niche gaps for IDT, said Dave Côté, vice president of marketing for IDT, who cited Quality's clock-management parts and its QuickSwitch high-speed bus switch as examples. Quality's products will help IDT target high-speed applications, the most likely growth candidate in the logic market, Côté said. In part, the acquisition is intended to bolster IDT's position against its main logic competitor, Texas Instruments Inc. “We're trying to build our strength in that area,” Côté said.
Quality likewise is pleased with the increased prospects from the merger. In a prepared statement, Quality chief executive Paul Gupta also cited IDT's larger sales organization as a plus for his company.
Both IDT and Quality have been hit hard by the slump in semiconductor demand, with IDT in particular taking a restructuring charge of $217 million for the quarter ending in September. But it was not the downturn that prompted IDT to expand its portfolio. “We look at it as a long-term opportunity to gain a family of products to complement our own,” Côté said.
Quality's products will be folded into the IDT portfolio and its company name retired. While brand names such as QuickSwich will be retained, they will be sold under the IDT banner. Whether Quality will have to leave its facility, which is just a mile from IDT headquarters, is uncertain.