Another MEMS Maker Snapped Up

Cypress Semiconductor Corp. (NYSE: CY) announced today it plans to swap 3.7 million shares of its stock, valued at about $163 million, to buy privately held Silicon Light Machines Inc. (SLM), which makes MEMS (microelectromechanical systems). SLM will become a wholly owned subsidiary of Cypress, the companies say, and will retain its present location in Sunnyvale, Calif., and its current staff of about 60 employees.

The deal is the latest in a string of MEMS acquisitions by semiconductor vendors. Early in July, Analog Devices Inc. (NYSE: ADI) offered $150 million in stock for BCO Technologies PLC, which makes MEMS and wafers in Northern Ireland. (See Analog Devices Moves into MEMS). And in April and May, JDS Uniphase Corp. (Nasdaq: JDSU) and Corning Inc. (NYSE: GLW), respectively, purchased Cronos Integrated Microsystems Inc. and Intellisense Corp. (See Big Vendors Acquire MEMS Makers).

All of these acquisitions highlight the vital role that MEMS are promising to play in telecom equipment. MEMS, which today are used in all sorts of industries and devices worldwide, also have a range of applications in optical components. Potential apps extend well beyond the tiny tilting mirrors used in some all-optical switch developments. In fact, Cypress and SLM don't even intend to make tilting mirrors. They will focus on making different types of tiny mechanical mechanisms which can be integrated with other optical devices on the same piece of substrate to perform functions like switching or dividing lightwaves. The end result is an overall reduction in the cost of making optical components -- which translates into lower prices for optical gear.

This isn't the first deal between Cypress and SLM. Since the mid-1990s, SLM has used Cypress as a partner to manufacture components for clients like Sony Corp. -- components that have been used for computer displays, printers, and other imaging applications. Cypress will be first to put SLM's MEMs to work in creating telecom components.

Cypress claims SLM's MEMS are easier to integrate into CMOS chips than other MEMS-makers' wares. And it plans next year to release CMOS chips with integral MEMS for use in optical networking devices like switches, cross-connects, and DWDM (dense wavelength-division multiplexing) gear.

The Cypress/SLM deal helped boost the price of Cypress shares from 44 to 47 in midday trading.

-- by Mary Jander, senior editor, Light Reading http://www.lightreading.com

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