Maxim Integrated Products, Inc.
) is planning to sell its digital video processing business to
GEO Semiconductor for an undisclosed amount. The deal is expected
to close by Dec 31, 2012.
Santa Clara-based, GEO Semiconductor or GEO is a fabless
semiconductor company that provides video and geometry processing
solutions. Its products include IC, a system-on-chip (SoC)
geometry processor for capture and projection light engines. It
is focused on smartphone peripherals, automotive cameras and
surveillance & video communication markets.
Maxim has more than 100 patents in its video and audio
processing portfolio, including its H.264 video compression and
audio processing products. Thus, GEO will get to add all those
patents to its portfolio. Further, the deal will allow GEO to
enhance its presence intellectual property (IP) for the camera,
Smart TV, surveillance, tele-presence video communications and
smartphone peripherals markets.
GEO is witnessing a sudden surge in camera-based mobile,
automotive and industrial applications. Thus, GEO's proprietary
technology combined with the IP from Maxim will enable
single-chip solutions for all of these products.
Maxim's digital video processing business falls under its
consumer segment. This segment's revenue is subjected to
significant seasonal fluctuations in demand, shorter product life
cycles as well as shorter customer lead times. However, it is
witnessing strength in the smartphone market, where it has
secured a number of wins. In fact, smartphones make up one of the
fastest-growing segments of the consumer market right now, with
very strong expected growth rates over the next few
Maxim has tasted success through its analog SoC with Samsung
and other customers as well. Samsung's Galaxy S3
smartphone, which uses Maxim's power SoC chipset, has emerged as
the leading smartphone maker in the U.S., surpassing
). Therefore, Maxim's relationship with Samsung is a big
As per MarketsandMarkets, the global smartphones market may
reach $258.9 billion by 2015, which represents significant growth
opportunity for Maxim. It therefore makes sense for Maxim to
divest its video processing business and concentrate more on the
smartphone market, which is expecting robust growth in the long
In the first quarter of 2013 (the last-reported quarter),
Maxim posted total revenue of $623.1 million, up 3.0%
sequentially but down 2.0% year over year. Increased smartphone
production helped sales in the consumer segment. However, the
year-over-year decline in revenues was on account of a inventory
imbalances and weakness in the distribution system.
Both Maxim and Apple have a Zacks #3 Rank (Hold).
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