Atmel Corp, the San Jose-based semiconductor company, says it has
signed a non-binding agreement to acquire Motorola Inc's smart
card chip business. The sale of the Smart Information Transfer (SIT)
business doesn't mean that Motorola will exit the smart card
business, though, as its Worldwide Smartcard Solutions Division (WSSD)
will continue to sell total smart card packages. Financial terms of the
deal were not disclosed. Atmel says the purchase will establish it as
one of the leaders in the global smart card IC industry - the third
largest to be exact. It asserts that the Motorola business brings it
enhanced security features as well as improved design and engineering
capabilities. Motorola, for its part, says the decision to sell the SIT
business is part of its overall strategy to focus on core businesses,
adding that it remains committed to the smart card industry and will
continue its relationship with Atmel for the supply of the
semiconductors it needs going forward. The business had previously come
under the umbrella of Motorola's Semiconductor Products Sector
(SPS). Tony Joyce, UK director of communications for SPS, said that
Motorola had been looking for a buyer for the SIT unit since it
restructured its semiconductor operations last year (CI No 3,490). He
said that the SPS business - which is based in East Kilbride, Scotland
- had refocused on the wireless, networking and automotive markets and
the smart card unit no longer fit in its plans. Atmel will take on the
SIT design and engineering staff from Motorola; other employees will be
absorbed Motorola's wafer manufacturing facilities in East
Kilbride. Joyce said that when the buy-out was completed there would a
phase out period of a year to 18 months as Atmel takes over the supply
of microcontrollers to customers. Motorola will continue to work on
the design and application side of smart cards at the Chicago-based
WSSD. Atmel says the deal should close during the first or second
quarter, subject to the normal conditions, and is expected to be
non-dilutive to its fiscal 1999 earnings.
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