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November 26, 1987

PLESSEY TO PAY UKP30m FOR FERRANTI’s CHIP BUSINESS

By CBR Staff Writer

Moving to double the size of its applications-specific integrated circuit business, Plessey Co Plc yesterday signed to acquire Ferranti’s chip business for UKP30m cash. The move consolidates the two leading UK semiconductor manufacturing operations into a single business – which at about $220m in annual sales is still small by international standards – and goes some small way towards filling that gap that will be left at Plessey after it merges its telecommunications interests into a new company with GEC Plc. For Ferranti, the move looks something of a sacrifice it has patiently built up its semiconductor business by making small strategic acquisitions in the US, and has become a notable supplier of custom microprocessors and other parts to major European manufacturers such as Nixdorf Computer AG. Ferranti explains the move by saying that it wants the cash it will receive – plus saving of the heavy development expenditure inherent in the chip business – to invest in exploitation of the opportunities offered by its acquisition of International Signal & Control Plc. The Ferranti semiconductor business has assets of UKP39m and annual sales of UKP60m; its sale will leave a small microwave business as the surviving entity of the Ferranti Electronics division. The acquisition will take Plessey Semiconductors offshore: Ferranti, which specialises in bipolar technology at its plants in the Manchester area, also has custom circuit design centres in Munich, West Germany and in California. Plessey Semiconductors reported sales of UKP64m in the year to March, up from just UKP18m in 1982, and Dataquest rated it the fastest-growing chip company in Europe last year. It works in both CMOS and bipolar technology – and has been experimenting with Gallium Arsenide – and has fabrication plants in Plymouth, Devon and in Swindon, Wiltshire. Among noteworthy products, Ferranti in April announced a relational database search co processor for the Motorola 68020, claimed to be 600 to 1,200 times faster than a software solution such as Oracle Corp’s Oracle (CI No 665) and the F200 and F100 families of military microprocessors and well as the gate array implementations of Ferranti’s civil and military Argus 700 minicomputers. The knee jerk market reaction was to mark Ferranti’s shares up 3p at 82 pence and to push Plessey down 5p at 136p, but as chip businesses go, both parts of what will be the new Plessey Semiconductors showed their mettle during the world chip slump of 1985 and 1986, getting through it with none of the swathes of red ink that disfigured the accounts of their US counterparts.

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