SGS-Thomson Microelectronics NV is to sell $1.6bn of shares on European and US stock markets in a partial privatization that will still leave majority control of the Franco-Italian chip maker in state hands. Of the 19 million shares on offer, 16 million will be sold by the holding company – owned by CEA Industrie and France Telecom together with Italian companies I.R.I and Comitato – which will reduce their holding from 68.9% to 52.6%. In addition, the company is to issue $500m of Liquid Yield Option Notes (LYONs) which can be converted into four million ordinary shares in 2008. The move marks a further slackening of state control over SGS-Thomson, which completed its IPO of 21 million shares in 1994 and followed this with the sale of a further 18 million in 1995. SGS-Thomson is facing a tough time in a ferociously competitive chip market plagued by excess capacity. In its last financial year to December 31, it reported net profits down 35.0% at $406.6m on revenue that rose 2.7% to $3.97bn (CI No 3331). The company is still investing heavily in new capacity. It has just announced plans to build a $500m wafer research fabrication facility in Crolles, near Grenoble in France to create 300mm or 12 inch wafers. The new facility, which will employ some 600 researchers, will be built on the site of the company’s existing plant in Crolles, which opened in 1992. Building of Crolles 2, as it has been termed, will start next year and the first silicon should be produced in 2000, in line with the availability of new 300mm processing equipment. SGS-Thomson also announced that it plans to build an advanced research center for non-volatile technologies in Agrate, near Milano in Italy. The Italian facility has been called R2 and will employ around 600 staff over the next five years. The site will have cleanroom technology that SGS-Thomson claims will be able to get down to 0.13 micron lithography by 2003.
