Cypress acquires SMaL Camera Technologies | PMA Report 2005
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PMA 2005 | Cypress acquires SMaL Camera Technologies
Cypress acquires SMaL Camera Technologies : Cypress Semiconductor Corp. today announced that it has signed and closed a definitive agreement to acquire SMaL Camera Technologies, a designer of industry-leading digital imaging solutions for a variety of business and consumer applications, such as ultra-slim digital still cameras, automotive vision systems, and cell phone cameras. SMaL's solutions are built around its proprietary low-power, wide dynamic range CMOS image sensors and controller ASICs.

The SMaL Technologies acquisition will significantly accelerate Cypress's entry into the high-volume CMOS image sensor business, initially targeting the market for 3 and 5 Megapixel cell phone cameras and automotive imaging systems. SMaL's product line will complement new cell phone products that Cypress will introduce in the second half of 2005 through its recent FillFactory acquisition. The result will position Cypress with the broadest line of image sensors currently available for the cell phone market. In 2004, Cypress acquired FillFactory NV, a Belgium-based leader in CMOS image sensor technology. FillFactory has been integrated into Cypress's Memory Products Division (MPD). SMaL Camera Technologies will similarly be integrated into MPD, and will be reporting to Luc De Mey, vice president of the division's image sensor group.
Cypress acquires SMaL Camera Technologies
SMaL Camera Technologies solutions paved the way for the industry's first ultra thin form factor and disposable cameras, including a 6 mm-thin, credit card-sized camera listed in the 2002 Guinness Book of World Records as the "thinnest camera ever." More than two million of these award-winning SMaL-enabled digital still cameras, based on the company's Ultra-Pocket rapid development kits, have been released by such leading consumer electronics manufacturers as FujiFilm, Logitech, Creative Labs, NHJ Limited, and Oregon Scientific. In addition, SMaL Camera Technologies has established itself as a leading player in the emerging automotive camera industry through major design wins with two of the world's largest Tier 1 automotive suppliers.

The company's proprietary Autobrite wide-dynamic-range technology captures images with crisp details, even in the presence of glare and backlit objects. SMaL's proprietary HiSENS circuitry dramatically improves low-light sensitivity without increasing the number of transistors used in the pixel. SMaL's Longevity low-power sensor solutions minimize battery drain in cell phone and other digital cameras. Under the terms of the agreement, Cypress will pay $42.5 million in cash, plus a performance-based earnout plan, contingent primarily on SMaL Camera Technologies achieving certain revenue levels. SMaL posted sales of $10.5 million in fiscal year 2004. This acquisition is expected to be dilutive to Cypress's non-GAAP earnings by approximately $0.01(1) per share for the next three quarters while SMaL ramps to a projected revenue in excess of $20 million in 2005.

"The market for image sensors is expanding rapidly, driven by the growth of applications such as cell phone cameras and the fast ramp of features in mainline digital cameras," said T.J. Rodgers, Cypress president and CEO. "SMaL Camera Technologies will combine with our FillFactory NV acquisition to provide Cypress with twin hammers and ultra-high-performance products in a cost-competitive business that is constantly driving toward more and more cost-effective features and benefits. "The CMOS process used to manufacture image sensors is similar to that used to make Cypress memories," Rodgers added. "That makes both SMaL Camera Technologies and FillFactory highly compatible with our core manufacturing capabilities and provides us with an additional way to optimize the production in our fabs. We expect SMaL Camera Technologies to leverage Cypress's global sales and marketing channels to enable us to quickly expand our image sensor business into new areas."

"FillFactory brought high-end products and a focus on custom solutions to Cypress," said Luc De Mey, founder, president and CEO of the Belgium-based, IMEC-spinoff prior to its acquisition by Cypress last year. "SMaL Camera Technologies provides a different capability altogether, consumer-oriented imaging solutions available now for mass markets. Together, the two businesses comprise a complete portfolio of products with high margins, on the one hand, and the potential for extremely high volume, on the other."

"SMaL's image sensor and system expertise has yielded differentiated products unmatched by our competition," said Charlie Sodini, chairman of SMaL Camera Technologies. "The market has validated these facts in the consumer space and recently in the automotive space as evidenced by our design wins at two of the largest Tier 1 automotive suppliers. Cypress has a strong track record for perfecting technologies and driving them to market in high volume and at low cost. By joining Cypress, we will be able to leverage the marketing and manufacturing muscle of a global company that is clearly committed to winning in this space."

The demand for CMOS image sensors, essentially cameras on a chip made with standard CMOS process technology, is growing rapidly, driven by a swift expansion of the market for digital still cameras (DSCs) and cell phone cameras. According to a Q204 report by the El Segundo, Calif.-based semiconductor research firm iSuppli, the 78-million-unit market for CMOS sensors in 2003 is projected to expand at an annual rate of more than 40 percent through 2008.
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