As it promised it would last year (CI No 3,503), Cirrus Logic Inc has now pulled the plug on its MiCRUS wafer fabrication joint venture with IBM Corp, in an attempt to return to the fabless model of its earlier, more profitable days. Cirrus has a 48% stake in the venture. Under an agreement revealed yesterday, but not yet closed, Cirrus Logic’s capacity obligations in East Fishkill, New York-based MiCRUS will be immediately resized to meet its current business needs, and IBM will assume full control. Cirrus’ reduced obligations will continue until December 31 2000.
Once the agreement closes, Cirrus will take a one-time restructuring charge, expected to fall within its current fiscal quarter ending on June 26. The specific amount, along with the company’s complete Q1 results, will be announced on July 21.
Cirrus said that by eliminating the fixed manufacturing costs associated with the venture, it had achieved one of the milestones in building itself a more efficient operating model. But Cirrus isn’t fabless yet; it still has its Cirent Semiconductor joint venture in place with Lucent Technologies Inc. Last September, when it announced plans to reduce its fixed wafer fab capacity by up to 70%, Cirrus said it was in discussions with Lucent to sell its 40% stake, either to Lucent itself or to other third parties. Cirent was formed in October 1996.
IBM originally founded the MiCRUS facility in 1980 for producing bipolar devices for mainframes, but it faced closure in IBM’s 1993 restructuring. The joint venture with Cirrus in January 1995 saved the unit from closure. By 1998, the two had invested around $800m in equipment and expansion. MiCRUS successfully moved out of the memory market in 1996 to concentrate on logic devices.
