UK foundry sold

Zarlink Semiconductor unloads its money-losing analog chip foundry in Swindon, England to MHS Electronics UK, a subsidiary of MHS Industries Group of France. Under terms of the deal, Zarlink will hand over the plant and its 120 employees to MHS Electronics for one euro. It will also contribute 2 million euros towards plant restructuring Zarlink.bmpcosts. In addition, the two firms have signed a three-year agreement to ensure continuing wafer supply to Zarlink, which has advanced MHS Electronics US$3.9 million for approximately nine months of orders. “This transaction will benefit Zarlink and its shareholders, while the analog foundry employees will prosper as part of a pure-play semiconductor foundry,” says Kirk Mandy, president and CEO. “Zarlink can now focus our resources solely on growth initiatives in the wired communications, optoelectronics and medical markets. Management and the board of directors will continue to review all aspects of our business, and where appropriate take the strategic steps necessary to position ourselves for success in these markets.” Zarlink will take a $13-million hit on the sale, but expects to add about five US cents a share to fiscal 2009 earnings, largely by eliminating losses incurred by the foundry in fiscal 2008.

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