Conexant and Alpha form $3 billion wireless chip group

Alpha Industries and Conexant Systems have announced the signing of an agreement that will combine Conexant’s wireless business with Alpha to create a $3 billion wireless chip group.

According to a statement, combining the wireless technology and product portfolios of the two companies will position the new entity to drive the evolution of RF integration for all major air interfaces, including CDMA and GSM, and complete semiconductor and software solutions for advanced 2.5G and 3G applications.

The new company would have approximately 140 million fully diluted shares outstanding, with current Alpha shareholders owning approximately 33 percent and current Conexant shareholders owning approximately 67 percent of the combined company’s shares on a fully diluted basis. The combined company would be valued at approximately $3 billion, based on Alpha’s December 14 closing price of $21.20 per share.

Under the terms of the agreement, Conexant will spin-off its wireless business, including its GaAs wafer fabrication facility, to be followed by a merger of this business with Alpha. Upon completion of the merger, the new company will purchase Conexant’s semiconductor assembly, module manufacturing and test facility for $150 million in cash.

The new company will reportedly have an expanded GaAs wafer manufacturing capability, including both PHEMT and InGaP HBT, for RF switch and power-amplifier applications. In addition, the company will have long-term assured access to Conexant’s advanced SiGe and BiCMOS wafer manufacturing for integrated RF applications.

The company will also own a high-volume, low-cost RF module assembly and test facility that has manufactured nearly 150 million power-amplifier modules to date.