Cypress acquires SMaL Camera Technologies
FEBRUARY 24--Cypress Semiconductor Corp. (San Jose, CA; www.cypress.com) has signed and closed a definitive agreement to acquire SMaL Camera Technologies (www.smalcamera.com), a designer of digital imaging solutions for applications such as ultraslim digital still cameras, automotive vision systems, and cell-phone cameras. SMaL was cofounded and launched in 1999 by electronic imaging experts at the Massachusetts Institute of Technology (Cambridge, MA). SMaL's solutions are built around its proprietary low-power, wide-dynamic-range CMOS image sensors and controller ASICs.
The SMaL acquisition will significantly accelerate Cypress's entry into the high-volume CMOS image-sensor business, initially targeting the market for 3- and 5-Mpixel 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 will similarly be integrated into the MPD and will be reporting to Luc De Mey, founder, president, and CEO of the Belgium-based, IMEC-spinoff.
SMaL solutions paved the way for the industry's first ultrathin-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 2 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 consumer electronics manufacturers as FujiFilm, Logitech, Creative Labs, NHJ Limited, and Oregon Scientific. In addition, SMaL 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 achieving certain revenue levels. SMaL posted sales of $10.5 million in FY2004. This acquisition is expected to be dilutive to Cypress's non-GAAP earnings by approximately $0.01 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 will combine with our FillFactory NV acquisition to provide Cypress with twin hammers and ultrahigh-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 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 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. "SMaL 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."