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International Business Machines Corp.

IBM and Cirrus Logic Confirm Completion of Joint Manufacturing Agreement for MiCRUS

Strategic Insights

— 1 min read

The joint manufacturing agreement signed by International Business Machines (IBM) and Cirrus Logic Inc. on September 8, 1994 has been completed, paving the way for the new joint venture, MiCRUS, to manufacture semiconductor wafers for each company. MiCRUS, which will use IBM's submicron wafer processing technology, will focus on the manufacture of semiconductor wafers without engaging in product licensing or product exchanges. The joint venture is expected to begin operations in January 1995 and will initially focus on manufacturing CMOS wafers with line widths in the 0.8 to 0.5 micron range.

Key Takeaways:

  • MiCRUS is a joint manufacturing agreement between IBM and Cirrus Logic, with a 52% ownership stake by IBM and a 48% ownership stake by Cirrus Logic.
  • The joint venture will be located at the Hudson Valley Research Park in East Fishkill, N.Y. and will take over an existing 175,000 square-foot IBM facility.
  • MiCRUS plans to begin operation in January 1995 and will initially hire approximately 400 people, many of whom are expected to be current employees of IBM.
  • The joint venture expects to be in volume production of Cirrus Logic products by mid-1995 and will lease approximately $145 million of wafer fabrication and infrastructure equipment.
  • IBM and Cirrus Logic expect to jointly provide MiCRUS with approximately $200 million of capital equipment for the expansion of operations.
  • Cirrus Logic will make a cash investment of $80 million in MiCRUS in fiscal years 1995 and 1996 for intellectual property licensing and working capital.
  • The State of New York has offered to provide Cirrus Logic with $40 million in long-term loans to fund the expansion.

Statistics:

  • $145,000,000: Approximate value of wafer fabrication and infrastructure equipment leased by MiCRUS.
  • $200,000,000: Approximate value of capital equipment provided by IBM and Cirrus Logic for the expansion of operations.
  • 400: Number of initial hires expected by MiCRUS in the first year.
  • 700: Projected total employment over a three-year period, depending on the success of the venture.
  • 52%: Ownership stake of IBM in MiCRUS.
  • 48%: Ownership stake of Cirrus Logic in MiCRUS.
  • $40,000,000: Amount of long-term loans offered by the State of New York to Cirrus Logic for the expansion.

Sources:

  • International Business Machines (IBM) and Cirrus Logic Inc., "Joint Manufacturing Agreement for MiCRUS" (September 8, 1994)
  • State of New York, "Loan Application" (Undated)
  • Cirrus Logic Inc., "Fiscal Year 1995 and 1996 Financial Report" (Undated)

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