8-KOther Events

MICROCHIP TECHNOLOGY INC 8-K Report (Aug 26, 2002)

Filed August 26, 2002For Securities:MCHPMCHPP

Summary

Microchip Technology Inc. (MCHP) has announced the closing of its acquisition of a semiconductor manufacturing facility in Gresham, Oregon, from Fujitsu Microelectronics, Inc. (FMI) on August 23, 2002. This strategic acquisition involved a 140-acre campus with over 826,500 square feet of buildings, including substantial cleanroom space, for a cash consideration of $183.5 million, funded by existing cash reserves. The acquired facility is intended to be used for semiconductor manufacturing, leveraging its existing capabilities. A significant benefit of this transaction is the qualification for Oregon's Strategic Investment Program (SIP), which will provide a partial property tax exemption for seven years starting July 1, 2003, subject to MCHP meeting certain employment, hiring, and community college contribution requirements. The company is also evaluating a potential impairment charge on its Fab 3 facility in Puyallup, Washington, and plans to relocate manufacturing equipment to optimize its production footprint, including leveraging the new Gresham facility.

Key Highlights

  • 1Microchip Technology Inc. acquired a semiconductor manufacturing facility in Gresham, Oregon, from Fujitsu Microelectronics, Inc. for $183.5 million in cash.
  • 2The acquired facility includes a 140-acre campus and approximately 826,500 square feet of buildings, with 200,000 square feet of cleanroom space.
  • 3The acquisition was financed using Microchip's existing cash and cash equivalent balances.
  • 4The Gresham facility has qualified for Oregon's Strategic Investment Program (SIP), offering a partial property tax exemption for seven years commencing July 1, 2003.
  • 5The SIP requires Microchip to meet minimum employment levels, adhere to a first source hiring agreement, and make annual contributions to the Mt. Hood Community College Microelectronics Training Center.
  • 6Microchip is evaluating a potential impairment charge for its Fab 3 facility in Puyallup, Washington, and plans equipment relocation to its Arizona facilities and the new Gresham site.
  • 7The company intends to use the Gresham facility for its own semiconductor manufacturing operations.

Frequently Asked Questions

The primary purpose of the acquisition was to obtain a semiconductor manufacturing facility to expand Microchip Technology Inc.'s manufacturing capacity and capabilities. The facility is intended to be used for producing semiconductors.

The SIP will provide Microchip with a partial property tax exemption on the Gresham facility for seven years, starting July 1, 2003. This exemption applies to assessed values above $100 million, with the taxable base increasing by 3% annually. This is expected to reduce the company's property tax burden in Oregon.

To maintain the SIP benefits, Microchip must meet specific requirements, including maintaining certain minimum employment levels at the Gresham facility each year, complying with a first source hiring agreement for new employees, and making annual contributions to the Mt. Hood Community College Microelectronics Training Center.

Microchip is evaluating whether an impairment charge will be necessary for its Fab 3 facility in Puyallup, Washington, following the acquisition of the Gresham facility. The company plans to relocate manufacturing equipment from Fab 3 to its facilities in Chandler and Tempe, Arizona, and also to the new Gresham facility, to optimize its production and facilitate a quicker process start at Gresham.