Analogue and mixed-signal IC maker Microsemi has announced its acquisition of Semicoa through a $25 million cash deal that will complement its existing military/aerospace-based product portfolio while expanding capacity.

With corporate headquarters in Irvine, California, Microsemi's semiconductors play in the implanted medical, defense/aerospace and satellite, notebook computers, monitors and LCD TVs, automotive, and mobile connectivity applications markets.

Semicoa, meanwhile, designs, develops, and manufactures semiconductors and smart munitions optoelectronics for the high reliability military, commercial aerospace, and satellite markets and is a competitor in the small signal high reliability transistor markets.

"In recent years Semicoa has been rapidly expanding its capacity to meet strong end-market demand and we fully expect to benefit from this investment as we consolidate its front-end and back-end equipment and operations into our Lawrence and Ireland facilities, thus increasing capacity while benefiting from our operational advantages," James J. Peterson, president and CEO of Microsemi, in a company statement yesterday.

Indeed, Semicoa in December completed construction of its new burn-in facility with an equipment expansion that represented an 82% increase in capacity and allowed a minimum of one week reduction in cycle time.

Romit Shah, a semiconductor market analyst at Lehman Brothers, pointed to the capacity additions as a positive result of the acquisition and suggested staff changes may soon come to the combined company.

"The main reason for the acquisition in our view is that it provides Microsemi with back-end capacity. The deal is expected to pay back within 24 months or earlier given an expected 60 to 70% of personnel sizing," Shah said in a research note yesterday.

"We continue to believe Microsemi is a good defensive stock in the backdrop of a weak macro economic environment as approximately 65 to 70% of their business is tied to military, medical, and aerospace," Shah said.

Microsemi expects the acquisition will be accretive.

By Suzanne Deffree, Managing Editor, News - Electronic News