QUOTE AND NEWS
Benzinga  Dec 15  Comment 
PetSmart (NASDAQ: PETM) shares reached a new 52-week high of $81.27 after the company agreed to be acquired by BC Partners for $83.00 per share in cash. Cypress Semiconductor (NASDAQ: CY) shares touched a new 52-week high of $14.26. Cypress...
Benzinga  Dec 15  Comment 
On CNBC's Fast Money, Tim Seymour suggested a short position in Guggenheim CurrencyShares Australian (NYSE: FXA). He thinks that the U.S. dollar strength is going to return next week. Dan Nathan is a seller of SPDR S&P Retail (ETF) (NYSE: XRT)....
Benzinga  Dec 10  Comment 
In a report published Wednesday, Sterne Agee analyst Vijay Rakesh reiterated a Buy rating on Cypress Semiconductor Corporation (NASDAQ: CY), and raised the price target from $13.00 to $18.00. In the report, Sterne Agee noted, “We take a deeper...
Benzinga  Dec 9  Comment 
In a report published Tuesday, Credit Suisse analyst John W. Pitzer reiterated a Neutral rating on Cypress Semiconductor Corporation (NASDAQ: CY), and raised the price target from $9.50 to $12.00. In the report, Credit Suisse noted, “CY has...
TheStreet.com  Dec 3  Comment 
NEW YORK (TheStreet) -- Cypress Semiconductor Corp.  is under investigation by the former attorney general of Louisiana, Charles Foti, and law firm Kahn Swick & Foti to determine whether consideration and the process that led to its merger...
Benzinga  Dec 3  Comment 
Analysts at BMO Capital upgraded Treehouse Foods (NYSE: THS) from Market Perform to Outperform. The price target for Treehouse Foods has been raised from $90 to $95. Treehouse Foods' shares closed at $82.11 yesterday. Analysts at Morgan Stanley...
Motley Fool  Dec 2  Comment 
Cypress Semiconductor jumped following news it will merge with Spansion. Here's what investors need to know.
Benzinga  Dec 2  Comment 
Summit Research Partners commented on the Cypress Semiconductor Corporation (NASDAQ: CY) and Spansion Inc. (NYSE: CODE) merger saying that the deal represents a "sum greater than its parts." Analyst Srini Sundararajan noted that “In a...
Benzinga  Dec 2  Comment 
Avanir Pharmaceuticals (NASDAQ: AVNR) shares reached a new 52-week high of $16.96 after the company agreed to be acquired by Otsuka Pharmaceutical for $17.00 per share in cash. Cypress Semiconductor (NASDAQ: CY) shares touched a new 52-week high...
Benzinga  Dec 2  Comment 
In a report published Tuesday, Topeka Capital Markets analyst Suji De Silva upgraded the rating on Cypress Semiconductor Corporation (NASDAQ: CY) from Hold to Buy, and raised the price target on $10.50 to $13.00. In the report, Topeka Capital...
Benzinga  Dec 2  Comment 
Benzinga  Dec 2  Comment 




 

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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