Mitel Semiconductors Ivey Business Case Nick Weller, Brin Conner, Joshua Goldsmith, Brian Gregory 2/14/2012
1
Mitel Semiconductors Mitel Semiconductors is a division of Mitel Corporation. The semiconductors division focuses on the business communications segment of the overall semiconductor market. The segment is relatively small when compared to the semiconductor market as a whole but the segment is experiencing high levels of growth over the next five years. Currently Mitel Semiconductors holds 7% of the business communications segment and management would like to see market share double in the next five to six years. Mitel Semiconductors is quickly approaching full capacity at its Bromont Foundry that performs the…show more content… In addition to the $10 million spent on upgrading equipment, Mitel will also need to spend another $40 million to $50 million in order to develop in-house wafer-growing capability. This will be needed because Mitel’s current supplier of 100mm wafers will no longer be able to support them in the coming years because of changes that they will be making because of larger customers. This upgrade will be sufficient to cover demand until the fiscal year 98/ 99 when Mitel will once again be at full capacity. Also, the option of acquiring the small
5
foundry in Sweden will cover Mitel’s demand in the short term. Mitel could purchase the foundry for $45 million to $50 million. This would be an attractive option for Mitel because they would be purchasing an existing market of 20,000 100mm wafers per year which means that the purchase would have an immediate impact on net income. However, until the new foundry’s capacity is increased above 20,000 wafers per year, no volume can be moved from the Bromont Foundry. Even when operating at full capacity, the new foundry can only produce 48,000 100mm wafers per year. The extra 28,000 wafers would cover Mitel’s demand until the year 98/99 when demand will once again surpass capacity. Acquisition of foundry in Sweden
Advantages · · Products could be easily integrated Annual production for 100mm from
Disadvantages · · $45-$50 Million investment Changing orientation of acquired
