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February 8, 1989


By CBR Staff Writer

In the latest round of hostile exchanges, Plessey Co managing director Stephen Walls has reacted to GEC-Siemens’ revised plans for his company (CI No 1110), by claiming that the modifications show the proposed acquisition to be an old fashioned carve-up of an aggressive competitor by two tired European monolithic enterprises. In contrast to GEC’s first bid three years ago, leading Plessey personnel concede that the UKP1,700m bid has a chance of success, and there is a recognition that the financial muscle of GEC-Siemens may tip the scales in the giants’ favour. Plessey fears that – as we suggested on Tuesday (CI No 1,110) GEC’s manoeuvres may undervalue GEC Plessey Telecommunications: the company feels that telecommunications will be one of its most profitable businesses in the 1990s. GEC’s false starts and dismal failures in the semiconductor business are well documented, and Plessey has used the latest developments in the bid battle to show off its semiconductor business – which would fall to Siemens under the new plan. In a vigorous attack on the bid, Plessey Semiconductors managing director Doug Dunn said a takeover would mark the beginning of the end of the UK electronics industry emphasising the key role of semiconductors in electronics; should the GEC-Siemens’ bid comes close to success, in fact, a management buy-out of the semiconductor unit would become a real possibility, in an effort to maintain the UK’s presence in the semiconductor industry. The Semiconductor business – which came to within hours of being sold by Plessey back in 1980 – is now highlighted as one of the group’s successes, and an example of the company’s vertical integration: Mr Dunn promised the unit will show record operating profits of around UKP22m this year. This is against a figure of UKP7m last year, which reflected costs incurred from the silicon wafer fabrication plant built in Roborough, Devon. The company claims the plant was the first in Europe to produce six-inch CMOS wafers; plant development resulted in 1.4 micron three-layer metal CMOS production in 1988, while multi-level metal stepper based processing will continue to at least down to the 0.5 micron level. Employing 350, the plant produces 5,000 wafers a month, with a capacity of 10,000; it has also designed its first International Solid State Circuits Conference-accepted chip, a 14mm square device that integrates 400,000 transistors. Stuart McIntosh, operations director at the semiconductor plant, has said the plant’s product development would fall by the wayside if the bid succeeded, with the factory becoming a foreign-owned manufacturing operation. Plessey Semiconductor also claims to have $5m worth of chip orders for reception equipment for the Astra television satellite; European orders over the next five years for silicon chips for satellite TV recievers are expected to be worth between $350m and $500m.

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