Chipmaker Intersil Corp. late Thursday proved that analog chip engineers still command a hefty price.
The company announced it would buy Planet ATE Inc., a tiny maker of semiconductors used in equipment that tests newly minted integrated circuits, for $46 million up-front and a potential $12 earnout. Tech Confidential spoke Tuesday morning with David Zinsner, Intersil's chief financial officer and head of M&A, who said the five-year-old startup raised roughly $10 million from several angel investors, Anthem Partners, Shepherd Ventures and Digital Coast Ventures. The 14 employees (all but one are engineers) own about half the company, Zinsner says.
Assuming the earnout is paid, the price tag breaks down to a cool $4.5 million per engineer, which attests to the fact that analog chip design is as much of an art, learned over years of practical experience, as it is a science. In its $467 million acquisition of Xicor Inc. three years ago, it paid $25 million per engineer. Zinsner's boss, Intersil CEO Rich Beyer, once told us, with tongue only slightly in cheek, that he was afraid to let his engineers drive home at night for fear they might get in an accident. These guys are well paid and protected jealously.
Planet ATE's product transfers a signal from a semiconductor that is being tested into the testing equipment itself. Intersil has several products that are used in chip testing, but "we have little to no penetration in the market," Zinsner says. "It didn't make sense to grow this organically," he adds.
Planet ATE is earning $10 million to $12 million in annual revenues, is more profitable than most other analog chip makers and has a group of new products on the way, Zinsner says. If Intersil can hang on to its newest analog engieneers, it might just have found itself a bargain. —Olaf de Senerpont Domis
See April 2004 story from TheDeal.com
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