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| Subject: STMicroelectronics has confirmed the rumors, announcing it is acquiring Italy-based card manufacturer Incard SpA for at least 65 million euros (US$76.9 million | |
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Author: Chip Maker STMicroelectronics To Buy Italian Card Vendor( 2003-05-22 ) |
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Date Posted: Wednesday, May 28, 11:38:48am In reply to: The ST group was formed in June 1987 as a result of the merger between SGS Microelettronica of Italy and Thomson Semiconducteurs of France. 's message, "STMicroelectronics--description March 2002" on Saturday, March 29, 12:07:52pm Chip Maker STMicroelectronics To Buy Italian Card Vendor ----------------------------------------------------------- STMicroelectronics has confirmed the rumors, announcing it is acquiring Italy-based card manufacturer Incard SpA for at least 65 million euros (US$76.9 million). The acquisition follows ST’s recent purchase of smart card software company Proton World International, as the Geneva-based semiconductor maker, Europe’s largest overall, seeks to shake up the smart card industry’s value chain. "This acquisition allows, when it makes sense, to be present on the full value chain," Maurizio Felici, head of ST’s smart card chip unit, tells Card Technology. "We have obviously the chip; we have the software capability; we have the card making and personalization." With this, including Java-based SIM card software the chip maker has licensed from UK-based Aspects Software, ST could bypass card vendors completely and sell directly to banks, GSM operators and other issuers. And, it could sell completed software-chip modules to the growing ranks of small, regional card vendors, which would embed the modules into plastic. Although ST says it still wants to do business with the major card vendors, its new vertical strategy is unlikely to sit well with the likes of Gemplus and Schlumberger, which would view ST as a direct competitor. Such smart card semiconductor manufacturers as Motorola and Philips have owned their own card operations in the past, but had limited success with the ventures. "Your customer usually considers you as competition," says Thomas Riener, a marketing manager at Philips. ST has already lost most of its business with the major card vendors for SIM card chips the past two years, most notably for SIMs packing 32 kilobytes of rewriteable memory, which is fast becoming an industry staple. It is also seeing erosion in its well-established business supplying chips for banking smart cards. ST reported its shipments of microprocessor chips for all types of smart cards dropped by 27% last year to 159.2 million units. According to market analysts, Japan-based chip maker Hitachi, now called Renesas, surpassed ST in 2002 as the No. 2 shipper of microprocessor chips in terms of revenue. Chip prices have fallen sharply the past two years, especially for SIM chips with 8K and 16K of rewriteable memory, which ST has been supplying. "In the case of ST, they have nothing to lose," says one major card vendor of the chip maker’s new strategy. An ST spokesman rejected that view, contending the chip vendor had kept its market share in banking and was strong in sales of chips for ID cards and for SIMs in Asia. In addition, ST will be able to supply high-end 128K chips in volume for SIM cards by the end of this quarter, Felici says. But, to market directly to card issuers, ST would need a much larger sales force than it has now, says Anoop Ubhey, an analyst for research firm Frost & Sullivan. That may be one reason it would be interested in financially troubled Incard, he said before the acquisition announcement. The card vendor is part of Naples, Italy-base IMP Group, primarily a maker of pay phones and other terminals for the telecommunications market. Incard last year ranked as the sixth largest shipper of smart cards in terms of units sold, according to research firm Gartner Dataquest. It shipped 34 million microprocessor cards, mainly lower-end SIM cards to GSM operators, down from 35 million smart cards the year before. It also shipped 34 million low-cost memory cards, mainly for the prepaid phone card market. Under the acquisition agreement, ST will pay 65 million euros up front and up to 10 million euros more if the Incard operation hits certain sales targets. Even before the Incard purchase, ST had been trying to move up the value chain. The announced purchase in March of Proton World for 37 million euros in cash, and up to 22.5 million euros more over 10 years, gives it more software for the banking chip card market. ST also uses IBM software to provide modules for Visa-branded banking cards. It has sported its own SIM card operating system for about a year and with the licensing deal with Aspects, announced in February, it can offer more sophisticated SIMs. Germany-based Infineon Technologies, again the No. 1 shipper of smart card ICs last year, so far has reportedly resisted any licensing deals for card software. "Why should I be so arrogant that I should say, ‘now I can do it better than my customers?’ " says Jürgen Kuttruff, head of the smart card ICs unit within Infineon’s Wireless Solutions business group, in a thinly veiled jab at long-time rival ST. ( 2003-05-22 ) [ Next Thread | Previous Thread | Next Message | Previous Message ] |