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System General agrees to buyout bid

The board of local power management chip designer System General Corp (崇貿科技) yesterday agreed to a US$200 million buyout offer from US rival Fairchild Semiconductor International Inc, saying the deal would boost earnings and expand its customer base.

Fairchild Semiconductor, the world's biggest power management chipmaker, plans to buy System General through its Taiwanese investment consulting subsidiary, New Conversion Co Ltd (新易股份有限公司), for NT$93 per share in cash.

"We believe that the deal will bring us more customers and help us broaden our product lineup," System General president Chandler Lin (林宗德) said at a press conference.

System General, which designs power management chips, or [AC/DC] power converters in computers, LCD monitors, printers and chargers, supplies its products primarily to local firms including Lite-On Technology Corp (光寶科技) and Delta Electronics Inc (台達電).

Bargaining power

The deal would also strengthen the company's patent coverage and bargaining power over patent disputes, Lin said.

Eric Chen (陳慧明), a semiconductor analyst at BNP Paribas Securities, said prolonged patent lawsuits with Power Integrations Inc were a key factor behind the board's decision to approve the acquisition offer.

"We understand System General is facing financial penalties and pressure to ship its power management integrated circuits to the US," he said.

He forecast the lawsuits would erode 35 percent of System General's profits this year.

System General was prohibited from exporting chips using technology involved in the patent controversy to the US as of mid-October last year in the wake of an unfavorable ruling made by the US International Trade Commission, a decision that the local company appealed.

De-listing

System General is expected to de-list itself from the local stock market by the end of this year becoming a fully-owned unit of Fairchild Semiconductor after the acquisition is completed.

System General shares rose 0.22 percent to NT$92 yesterday.

Local competitor Richtek Technology Corp (立錡) jumped 1.67 percent to NT$304, while Advanced Analog Technology Inc (台灣類比) declined 0.44 percent to NT$343.
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