Cypress Acquires SMaL Camera Technologies | Cypress Semiconductor
Cypress Acquires SMaL Camera Technologies
Cypress Acquires SMaL Camera Technologies
Leading Designer of CMOS Image Sensor Solutions for Digital Cameras, Automotive, Other Applications to Accelerate Cypress Penetration of Imaging Business
SAN JOSE, Calif., February 14, 2005 -- Cypress Semiconductor Corp. (NYSE: CY) today announced that it has signed and closed a definitive agreement to acquire SMaL Camera Technologies, a designer of industry-leading digital imaging solutions for a variety of business and consumer applications, such as ultra-slim digital still cameras, automotive vision systems, and cell phone cameras. SMaL's solutions are built around its proprietary low-power, wide dynamic range CMOS image sensors and controller ASICs.
The SMaL acquisition will significantly accelerate Cypress's entry into the high-volume CMOS image sensor business, initially targeting the market for three- and five megapixel cell phone cameras and automotive imaging systems. SMaL's product line will complement new cell phone products that Cypress will introduce in the second half of 2005 through its recent FillFactory acquisition. The result will position Cypress with the broadest line of image sensors currently available for the cell phone market. In 2004, Cypress acquired FillFactory NV, a Belgium-based leader in CMOS image sensor technology. FillFactory has been integrated into Cypress's Memory Products Division (MPD). SMaL will similarly be integrated into MPD, and will be reporting to Luc De Mey, vice president of the division's image sensor group.
SMaL solutions paved the way for the industry's first ultrathin-form-factor and disposable cameras, including a 6 mm-thin, credit card-sized camera listed in the 2002 Guinness Book of World Records(TM) as the "thinnest camera ever." More than two million of these award-winning SMaL-enabled digital still cameras, based on the company's Ultra-Pocket® rapid development kits, have been released by such leading consumer electronics manufacturers as FujiFilm, Logitech, Creative Labs, NHJ Limited, and Oregon Scientific. In addition, SMaL has established itself as a leading player in the emerging automotive camera industry through major design wins with two of the world's largest Tier 1 automotive suppliers.
The company's proprietary Autobrite wide-dynamic-range technology captures images with crisp details, even in the presence of glare and backlit objects. SMaL's proprietary HiSENS(TM) circuitry dramatically improves low-light sensitivity without increasing the number of transistors used in the pixel. SMaL's Longevity(TM) low-power sensor solutions minimize battery drain in cell phone and other digital cameras.
Under the terms of the agreement, Cypress will pay $42.5 million in cash, plus a performance-based earnout plan, contingent primarily on SMaL achieving certain revenue levels. SMaL posted sales of $10.5 million in fiscal year 2004. This acquisition is expected to be dilutive to Cypress's non-GAAP earnings by approximately $0.01 per share for the next three quarters while SMaL ramps to a projected revenue in excess of $20 million in 2005.
"The market for image sensors is expanding rapidly, driven by the growth of applications such as cell phone cameras and the fast ramp of features in mainline digital cameras," said T.J. Rodgers, Cypress president and CEO. "SMaL will combine with our FillFactory NV acquisition to provide Cypress with twin hammers and ultra-high-performance products in a cost-competitive business that is constantly driving toward more and more cost-effective features and benefits.
"The CMOS process used to manufacture image sensors is similar to that used to make Cypress memories," Rodgers added. "That makes both SMaL and FillFactory highly compatible with our core manufacturing capabilities and provides us with an additional way to optimize the production in our fabs. We expect SMaL to leverage Cypress's global sales and marketing channels to enable us to quickly expand our image sensor business into new areas."
"FillFactory brought high-end products and a focus on custom solutions to Cypress," said Luc De Mey, founder, president and CEO of the Belgium-based, IMEC-spinoff prior to its acquisition by Cypress last year. "SMaL provides a different capability altogether-- consumer-oriented imaging solutions available now for mass markets. Together, the two businesses comprise a complete portfolio of products with high margins, on the one hand, and the potential for extremely high volume, on the other."
"SMaL's image sensor and system expertise has yielded differentiated products unmatched by our competition," said Charlie Sodini, chairman of SMaL Camera Technologies. "The market has validated these facts in the consumer space and recently in the automotive space as evidenced by our design wins at two of the largest Tier 1 automotive suppliers. Cypress has a strong track record for perfecting technologies and driving them to market in high volume and at low cost. By joining Cypress, we will be able to leverage the marketing and manufacturing muscle of a global company that is clearly committed to winning in this space."
The demand for CMOS image sensors--essentially cameras on a chip made with standard CMOS process technology--is growing rapidly, driven by a swift expansion of the market for digital still cameras (DSCs) and cell phone cameras. According to a Q204 report by the El Segundo, Calif.-based semiconductor research firm iSuppli, the 78-million-unit market for CMOS sensors in 2003 is projected to expand at an annual rate of more than 40 percent through 2008.
SMaL Camera Technologies develops digital imaging solutions for a variety of business and consumer markets, including ultra-slim digital still cameras, automotive vision systems, and camera-enabled mobile devices, such as cell phones. SMaL's solutions are built around its proprietary low power CMOS image sensors, controller ASICs, and Autobrite(R) wide dynamic range technology. These solutions have enabled previously unavailable benefits, revolutionizing the digital photo and video markets. SMaL has received numerous technology and business awards, such as the "Best of Show" at the 2001 Consumer Electronics Show. SMaL was co-founded and launched in 1999 by leading electronic imaging experts at the Massachusetts Institute of Technology. SMaL (www.smalcamera.com) is a privately held company backed by Carlyle Venture Partners, Stata Venture Partners, Wasserstein Venture and Yokogawa Corporation."
Cypress Semiconductor Corp. (NYSE: CY) provides high-performance solutions for personal, network access, enterprise, metro switch and core communications system applications. Leveraging its process and system-level expertise, Cypress makes industry-leading physical layer devices, framers and network search engines, along with a broad portfolio of high-bandwidth memories, USB devices, timing technology solutions and reconfigurable mixed-signal arrays. More information about Cypress is accessible online at www.cypress.com.
 On a GAAP basis, which includes amortization of intangibles and other acquisition-related charges such as in-process R&D, the impact is estimated as a loss per share of $0.06, $0.02 and $0.02 respectively for the first three quarters of FY05. The acquisition-related charges are preliminary estimates pending completion of the purchase accounting process.
This press release contains statements that are not historical facts, but are forward looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. We use words such as "anticipates," "believes," "expects," "future," "estimates," "plans," "intends" and similar expressions to identify forward-looking statements." Such forward-looking statements regarding the future prospects of Cypress, the image sensor market and semiconductor industry more generally, Cypress's anticipated revenue and operating results, and customer demand for future Cypress products are based on management's current expectations as of the date of this release. Our actual results may differ materially due to a variety of uncertainties and risks, including those described in our filings with the Securities and Exchange Commission, as well as our ability to fully realize the anticipated benefits of the acquisition of SMaL Camera Technologies, the ability of the acquisition to accelerate our time to market for certain products, the possible disruptive effects of merging two companies, our ability to leverage our current sales and marketing channels for SMaL products, the growth of the image sensor market and the demand for Cypress and SMaL products. Cypress cannot provide any assurance that its results will meet expectations, or that it has identified all of the risk factors that might materially affect such results. We assume no responsibility to update any forward-looking statement.
Cypress and the Cypress logo are registered trademarks of Cypress Semiconductor Corporation. Ultra-Pocket is a registered trademark of SMaL Camera Technologies. HiSENS and Longevity are trademarks of SMaL Camera Technologies. All other trademarks are the property of their respective owners.