QUOTE AND NEWS
DailyFinance  Aug 20  Comment 
SAN JOSE, CA -- (Marketwired) -- 08/20/14 -- Cypress Semiconductor Corp. (NASDAQ: CY) today announced that its Board of Directors has approved a quarterly cash dividend of $0.11 per share payable to holders of record of the Company's common stock...
StreetInsider.com  Aug 4  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Management+Changes/SolarCity+%28SCTY%29+Taps+Cypress+Semi%27s+%28CY%29+Brad+Buss+as+CFO/9715273.html for the full story.
Motley Fool  Jul 22  Comment 
T.J. Rodgers never fails to amuse, enlighten, and entertain.
Motley Fool  Jul 21  Comment 
A look a Cypress Semiconductor's performance, and what investors can expect from it going forward.
Cloud Computing  Jul 18  Comment 
Research and Markets (http://www.researchandmarkets.com/research/2vq6v5/emerging_trends) has announced the addition of the "Emerging Trends in the Network Security Market in India, CY 2013" report to their offering. read...
SeekingAlpha  Jul 17  Comment 
Cypress Semiconductor Corporation (NASDAQ:CY) Q2 2014 Results Earnings Conference Call July 17, 2014, 11:30 AM ET Executives T.J. Rodgers - President and CEO Thad Trent - EVP-Finance & Administration and CFO J. Daniel McCranie -...
TheStreet.com  Jul 17  Comment 
NEW YORK (TheStreet) -- Cypress Semiconductor was gaining 0.6% to $10.37 Thursday after beating analysts' estimates for earnings in the second quarter. For the second quarter Cypress reported earnings of 16 cents a share, beating analysts'...
Motley Fool  Jul 17  Comment 
Cypress Semiconductor beat earnings estimates in the second quarter, thanks to a favorable product mix and tight cost controls.
Motley Fool  Jul 17  Comment 
Can Cypress follow through on its momentum from the first quarter?
Motley Fool  Jul 11  Comment 
With Cypress' earnings coming up, in which direction will the stock move after earnings?




 

Cypress Semiconductor Corporation makes the processors and chips that go into computers, phones, and other integrated electronic devices. Cypress' product portfolio has two segments. First, there are commodity products for timing and communication - an example is a USB controller integrated into a mouse or a digital camera, allowing communication between the device and a computer. Cypress also sells newer programmable chips that can conduct multiple tasks at lower cost since they combine functionalities spread across multiple chips.[1] These newer devices can compute and communicate for devices such as mp3 players, laptop computers, and other household appliances. The majority of Cypress' revenues still come from the legacy business, although the company's focus is to develop the higher-margin programmable chip business.

While CY was a majority holder of SunPower (SPWRA), it completed a spin-off of the company in late 2008.[2]

From a manufacturing standpoint, the majority of Cypress' work is conducted in-house, with only a small portion outsourced to foundries, in contrast with many competitors such as QUALCOMM (QCOM) or Broadcom (BRCM) that have switched to "fabless" outsourcing to foundries. This leads to a higher cost structure for Cypress, since it must handle its own manufacturing. However, it also means it does not have to invest capital into designing processes and products that meet foundry requirements for outsourcing.

Business Overview

Business & Financial Metrics[3]

In 2009, CY incurred a net loss of $150.4 million on total revenues of $667.8 million. This represents a 47.2% reduction in net loss on a 12.8% decrease in revenues from 2008, when the company lost $284.9 million on revenues of $765.7 million.

Business Segments[4]

The company is organized into three main segments and SunPower (a majority-owned subsidiary offering solar power products).

Consumer and Computations Division (41.2% of total revenues)

This segment makes general purpose timing products, USBs and programmable systems on chips (PsoCs). [5]

Data Communication Division (14.5% of total revenues)

This segment makes data communications devices for wireless handsets and video systems. [6]

Memory Product Division (43.2% of total revenues)

This segment offers SRAM memory and image sensors. [7]

Emerging Technologies and Other (1.2% of total revenues)

This segment incorporates the operations of Cypress Envirosystems, AgigA Tech, Optical Navigation Systems, Chinese operations, and various corporate operations.[8]

IMAGE:CY-Segments2009.jpg[4]

Key Trends & Forces

Trend of device integration will grow the programmable chip business

Management has been attempting to shift the product mix of the semiconductor business towards programmable chips which can do the work of several non-programmable chips. For example, the Programmable System on a Chip system (PSoC) allows for as many as 100 functions on one chip, saving customers design time, space, power consumption, and system cost.[9] The Programmable Radio on a Chip system (PRoC) integrates PSoC with a wireless USB radio. As consumers demand more sophisticated devices, with better battery life and smaller size, manufacturers are turning to innovative products such as CY's to offer advanced capabilities in smaller devices. For example, many of Apple's iPod Nano's components are sourced from Cypress.[10] However, this market segment is still relatively immature and fragmented, and a number of other companies are offering competing integrated systems.

Semiconductor cyclicality is a constant risk for Cypress

Semiconductors underpin many of the consumer electronics in the industrialized world. These range from smartphones and mp3 players, to smart appliances like newer TV's and laundry machines. This correlation with the macro-economy makes Cypress susceptible to economic boom and downturn. This is compounded by the significant capital expenditure required to create the product, as well as a short product life due to R&D making old parts obsolete. The vast majority of Cypress' semiconductor business are considered commodity products, with the exception of the PSoC business mentioned above, which accentuates the company's vulnerability to lower-priced competitors. For more information on semiconductor chips, see the Semiconductor Cyclicality article.

Silicon Prices are a major input to CY's cost structure

Rising prices of silicon have fueled a search for alternative materials in both the semiconductor and solar photovoltaic industries.[11] While there is no immediate alternative to silicon for semiconductors, thin-film's rise has fueled growth expectations for competitors such as First Solar (FSLR). Cypress' margins have not been significantly dented by the price inflation, but continued price inflation will put pressure to either hurt margins or raise prices.

Competition

Semiconductor Firms

The semiconductor market is crowded, with several specialty and commodity players. Competitors pursing a similar programmable chip strategy include Applied Micro Circuits (AMCC) and Altera (ALTR).

References

  1. Cypress Semiconductor "PSoC" pg.7
  2. CY 2009 10-K pg. 3  
  3. CY 2009 10-K pg. 35  
  4. 4.0 4.1 CY 2009 10-K pg. 38  
  5. Cypress Semiconductor "Business - General" pg.4
  6. Cypress Semiconductor "Business - General" pg.4
  7. Cypress Semiconductor "Business - General" pg.4
  8. CY 2009 10-K pg. 116  
  9. Cypress Semiconductor FY 2007 10-k "PRoC" pg. 7
  10. BusinessWeek "Unpeeling Apple's Nano" September 22, 2006
  11. Tekrati.com "Record Solar Silicon Prices Helping Thin Film Solar Companies and Equipment Suppliers, says The Information Network " January 3, 2008
  12. ComputerWorld "Freescale accepts $17.6B equity buyout" September 16, 2006
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