Trying to trace UK electronics companies through the maze of takeovers, sales, mergers and disposals of the last fifty years is complex and frequently depressing. Then sometimes something happens and, irrationally, the mood lightens. The news that the Plessey Semiconductors name is once again to be on the outside of a wafer fab provokes one of those irrational moments.
Thirty years ago Britain still had a significant home-grown electrical and electronics industry.
ICL was building mainframe computers, with its own operating system and using its own designs of LSI ICs.
Ferranti was building military systems, including radar and military and industrial computers. (It had earlier sold its commercial computing activities to ICL.) It was also selling ICs into the open market, including a 16-bit microprocessor, the Ferranti F100-L, and large uncommitted logic arrays (ULAs or gate arrays). Ferranti had a world lead in ULAs and provided the fabric for the processors for the first home computers in the UK.
STC (previously Standard Telephones and Cables) was deeply involved in telecommunications, including rolling out the first fibre optic products and making underwater cables.
GEC, under its strong-willed managing director, Arnold Weinstock (later Lord Weinstock), was already one of the largest companies in Britain and was continuing on a path of growth by acquisition across a wide range of electrical and electronic companies, from heavy electrical engineering to consumer products.
Thorn EMI, formed by the merger of Thorn Electrical Industries and EMI, was a strange conglomerate of entertainment and electronics. It, too, had a defence electronics sector and some strong consumer brands (and EMI records).
And The Plessey Company itself was also serving an enormous range of markets, from defence equipment, including radar, through semiconductors to telecommunications: it was a partner with STC and GEC in System X – the first digital telephone exchange or switch.
By the mid 1980s, the scene had changed dramatically. Virtually all the companies had either been taken over or were on the verge of disappearing. Ferranti bought a US defence contractor, International Signal and Control, which looked like a prosperous electronics company but turned out to be very deeply involved in illegal arms sales, acting for some of the more concealed parts of the US government. When the government pulled the plug, the CEO, James Guerin, dressed up the balance sheet and sold the company. While Guerin finished up in jail, Ferranti was forced into bankruptcy, and the juicier bits were bought by GEC.
STC had bought ICL, but didn’t really know what to do with it, and was already beginning the relationship with Fujitsu that would see the Japanese company taking over ICL. STC itself was bought by ITT, and then sold again, and by 1989 it was bought by Nortel.
Thorn EMI was undergoing massive restructuring, including selling off all its electronics businesses, and it finally demerged back into Thorn and EMI.
The Plessey Company was under siege from GEC, as a part of Arnold Weinstock’s drive to single-handedly restructure the entire British electrical and electronics industry. A first take-over bid had been rejected by the British Government, who was concerned about the concentration of defence electronics. To get around this, GEC teamed up with Siemens and, after a hostile take-over, carved the company up between them. After Weinstock’s retirement, GEC underwent a number of reorganisations, realignments, disposals, acquisitions and name changes. After renaming itself as Marconi, after a company it had acquired in the 1950s, it was bought by Ericsson.
Plessey Semiconductors originally operated from fabs in Lincoln, in the east of England, and at Roborough, near the naval port of Plymouth, which is in the west. There was also a significant fab and design centre at Cheney Manor, Swindon, where semiconductor manufacture started in 1956. GEC sold Plessey Semiconductors to Mitel Semiconductors. Lincoln, which was running Silicon on Sapphire, was then sold off and is operating as Dynex, now 75% owned by Zhuzhou CSR Times Electric Co of China.
Mitel renamed itself Zarlink. It sold Roborough to X-FAB, a foundry operation based in Germany, and Cheney Manor was sold to MHS, a French company, for one euro. (That’s right, a single dollar and fifty cents at the time.) After MHS collapsed last year, a management buy-out at Cheney Manor created Plus-Semi, which has now acquired the Roborough fab from X-FAB and renamed the new operation “Plessey Semiconductor.”
Are you still with me?
Cheney Manor was running as an analog foundry and also provided design services in a broad range of applications. Roborough is an 8-inch 0.35 μm CMOS facility, also operating as an analog foundry. The new company is going to continue to operate the foundry activity at Roborough and is also moving into standard products. The Cheney Manor fab is closing, and the Bipolar and BiCMOS technology will move across to Roborough. The transfer to 8-inch should, the company says, “Provide more cost effective manufacture for the customer.” (I think that may possibly mean cheaper.) Cheney Manor will continue as a design and technology centre, providing customer services as well as developing the new products.
Plessey’s management feels that the move into standard products will provide a strong base for future growth. The foundry business as a whole is intensely competitive, and, as with much in semiconductors, greater volumes lead to lower prices. Roborough is relatively small, so meeting the aggressive pricing of other players can be difficult. By moving into standard products and building on the company’s experience in both process technology and the design services they had previously offered, Plessey Semiconductors hopes to be able to create products that provide a better return to them.
With the standard products, “new” Plessey will draw on the “original” Plessey’s pedigree in the industrial, communications and military markets, and the first products are likely to be a range of amplifiers, demodulators, synthesisers, high-speed pre-scalers etc, with other products to follow. The first products are due to be released later this year.
A particular technology strength is silicon on insulator (SOI), for both high voltages and extended temperatures. The company talks about combining the high voltage SOI with precision passive components to create high precision products for the instrumentation market. Products taking advantage of the extended temperature range are obviously going to find homes in the automotive and industrial markets. And Plessey feels that the 0.35 μm process, with its very low dark current, is ideal for imaging products.
These are extremely interesting and potentially profitable markets, so at first glance this looks like a good strategy for the company – with the existing foundry business providing cash flow and fab loadings while the new products come on stream. This depends, of course, on having adequate financing in place, and the company says,
“Plessey Semiconductors is a well-funded private company with a solid capital base of investors, strong operational cash flow from its existing foundry business and additional funding from the UK government’s South West Regional Development Agency. Investors include members of the senior management team and undisclosed private VCs and industry third-parties.”
As the phrase “well-funded” suggests, they are not talking about how much they have, but the South West Regional Development Agency provided a grant of £1 million (US$1.6 million).
For many people, The Plessey Company was a great place to work and a good company from which to buy quality products: the GEC/Siemens dismembering left a bad taste in many peoples’ mouths at the time. Plessey Semiconductors are hoping to carry forward the heritage, resurrecting the reputation for innovation and building on existing strengths in manufacturing, process development and product design.
There is never a good time to start a new venture, and, while it could be argued that this is not a totally new venture but the rebranding and re-orientation of existing operations, it is still a brave move. However, Malcolm Penn of Future Horizons this week stated that the semiconductor market will grow in 2010, and he predicted the growth to be between 12% and 31.1%. So perhaps this is as good a time as any to re-launch a well-respected name.