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Tuesday, August 16, 2005
Spectacular Philips expansion in solid-state lighting business


We present a coverage of the almost complete "buyout" of Lumileds by Philips, as it appeared in the on-line press yesterday.

The important point to remember is that Philips is lately continuously repositioning itself in the world market by both expanding and restricting its activities in an attempt to gain technology and market leadership in critical future developments. (Please note that with the notable exception of the official company announcement, most journalists almost fail to highlight the importance of this movement.)

Philips acquires controlling state in Lumileds

Philips has gained a controlling 96% interest in Lumileds, a world leader in high-brightness LEDs (Light Emitting Diodes) for solid-state lighting. The deal underscores Philips' commitment to growing its Lighting business and establishing a unique position in a technology that's set to transform the lighting market.

Solid-state lighting is seen as the biggest revolution in lighting technology since Edison invented the incandescent bulb. Although it's been a niche-market for general lighting markets in the past, the creation of white-light LEDs a few years ago has transformed its potential. Over time, solid-state lighting will revolutionize how we light our homes, our cars, our shops and our cities.

At today's press briefing Gerard Kleisterlee, president and CEO of Philips, and Theo van Deursen, CEO of Philips Lighting (left), demonstrate an example of photonic textiles, a soft cushion with an LED lighting system serving as a display.

Unique capabilities
Created as a joint venture between Philips and Agilent Technologies in 1999, Lumileds was set up to pioneer everyday uses of solid-state lighting. Today, it produces LEDs for automotive lighting, computer displays, LCD TVs, signage and signaling and general lighting. Lumileds has its headquarters in San Jose, USA, and employs some 1760 people in San Jose, California, USA, Penang, Malaysia as well as Best, The Netherlands.

In purchasing Agilent's 47% holding, Philips has extended its capabilities in LED lighting. It now has a unique position covering the full lighting value chain - from the semiconductor dies that form the basis of LEDs to complete solid-state lighting modules and systems. By aligning Lumileds LED activities with existing LED lighting modules and luminaries of Philips Lighting and semiconductors competencies in Philips Semiconductors, Philips will now be an excellent position to strengthen its leadership position in this new technology.

As a world leader in conventional lighting, Philips has strength in depth. It can leverage its wider lighting know-how, production capabilities and distribution channels. And it can call on its expertise in research to drive innovation in this huge new field.

LED (Light Emitting Diode) die is the basis and represents the first segment in the LED value chain

Lighting as you never seen before
Until recently, the term LED conjured up images of the little red or green lights on our computers or washing machines. But solid-state lighting goes far beyond this.

White-light LEDs can be based on a technique that involves adding a layer of phosphors to a blue-light semiconductor LED. It's this breakthrough technology that's enabling a transformation in lighting.

Imagine lights that adapt automatically to the time of day, creating colors and effects to suit your activities or mood. Think of the possibilities for design, fashion and safety when you can embed lighting in roads, building materials, furniture, car interiors, even clothes (such as jackets for police or road workers).

Consider what shop-designers and city planners could do with lights of every color that can be programmed to deliver an array of effects. Not just on/off or dimmed, but all kinds of states, even mimicking a video display.

This is the world of solid-state lighting. It's a world of endless creative possibilities. Yet it's also extremely practical, because LEDs are small, robust and highly energy efficient. An LED module is a highly versatile, self contained lighting system.

Environment
In an era of climate change and soaring energy prices, very low power consumption is an invaluable advantage over conventional lighting. It makes lighting safer and easier to control as well. And it opens the way to new applications, particularly in emerging markets. For instance, we may see new forms of lighting in rural areas of countries like India or China where power supplies are limited.

LEDs are also extremely long-life, so they virtually never need to be replaced. For example, LEDs used for street lighting could last 10-15 years in continuous normal use. What's more, the combination of energy efficiency and low maintenance will make many applications less expensive. So LEDs are cost-effective, as well as highly attractive and versatile.

Continuing a Philips tradition
Throughout its 114 year history, Philips has been improving people's lives through lighting. This move to strengthen its position in solid-state lighting continues this tradition. It also demonstrates Philips' commitment to growth, innovation and emerging markets.

Philips buys out Lumileds as Agilent cashes chips

As Agilent sells off its semiconductor business, Philips acquires the company's 47% stake in LED manufacturer Lumileds for nearly $950 million.

Lighting pioneer Royal Philips Electronics is to buy Agilent Technologies’ 47% share in the LED manufacturer Lumileds for €765 million ($948 million) in cash.

Philips CEO Gerard Kleisterlee (left) and Theo van Deursen, the CEO of Philips Lighting (right), say that the illumination market is poised on the edge of solid-state revolution similar to that caused by the invention of the light bulb. The executives added that following the Lumileds acquisition Philips would invest in technological innovation.

The deal, which will mean that Philips owns 96.5% of Lumileds, is part of Aglient’s wider plan to sell off its entire semiconductor business unit, which also includes GaAs IC, fiber-optic component and low-brightness LED manufacturing facilities.

Private equity firms Kohlberg Kravis Roberts and Silver Lake Partners are expected to take control of the remaining semiconductor business in a deal worth about $2.6 billion in total, according to reports in the Wall Street Journal online.

Founded in 1999 as a joint venture between the two companies, Lumileds makes LED chips, packaged LEDs and is perhaps best known for its high-power Luxeon light sources.

And it is this high-power segment for lighting applications that Philips is primarily interested in. “This extends our involvement across the LED value chain,” said Gerard Kleisterlee, the president and CEO of Philips. “[We now] have the full value chain under our control."

Theo van Deursen, the CEO of Philips Lighting, said that the Lumileds acquisition was of "huge strategic importance" to the Dutch company. He also extolled the virtues of LED-based lighting for tempting shoppers and in medical applications.

But it is the general illumination market that is the critical one for Philips. "We see this as a long-term growth market and we are going to invest in innovation," added Kleisterlee.

The LED manufacturer’s history is rooted in Hewlett-Packard (HP), where it began life as HP’s optoelectronics division.

That division became part of Agilent Technologies when HP split into two businesses in 1999.

Now headquartered in San Jose, CA, Lumileds employs 1760 people globally. Company sales grew 28% in the fiscal year ending July 2005 to reach $324 million, says Philips.

From: [compoundsemiconductor.net]

Philips buys lighting firm stake for 765 mln euros

Dutch group Philips Electronics said on Monday it would buy Agilent Technologies Inc's 47 percent stake in lighting firm Lumileds for about 765 million euros in cash.
Philips, the world's biggest lighting maker, also said in a statement it would buy back up to 1.5 billion euros of its own shares in a new share buyback program over the next 12 months. The shares will be canceled.

Philips, Europe's biggest consumer electronics producer and the region's number three in semiconductors, had been expected to announce a further share buy-back in the second quarter. In the first half of the year, Philips bought back about 500 million euros worth of its own shares and canceled them.

The Lumileds Lighting acquisition will give Philips 96.5 percent and control of the company.

"While we remain focused on expanding the company through value-creating acquisitions in our Medical Systems, Domestic Appliances and Personal Care and in our Lighting businesses, we'll continue managing our capital efficiently to create optimum value for our shareholders," Philips Chief Executive Gerard Kleisterlee said.

From: [Yahoo]

Agilent Dumps Semiconductors

Citing a need to focus its energies on its core business, equipment test manufacturer Agilent (Quote, Chart) sold its semiconductor business for $2.66 billion and shed roughly 1,300 jobs from its roster Monday.

The Palo Alto, Calif., company also announced its intention to sell its stake in Lumileds for $950 million and repay $50 million of debt from the LED manufacturer.

The money will be used in an immediate share repurchase program valued at $4 billion. Agilent officials said they intend to pay the company's $1.5 billion convertible debenture -- a debt that can be converted to stock later by the investor -- which could reduce the company's outstanding shares by 36 million.

The deals are expected to close by the end of October, pending regulatory and governmental approvals.

Bill Sullivan, Agilent president and CEO, said the moves were made to focus its business as a pure-play test measurement company and reduce global infrastructure costs by $450 million.

"It has become increasingly clear that investors also prefer this exclusive focus on the $40 billion measurement market," he said in a statement. "Returning the proceeds of these divestitures via share repurchases demonstrates Agilent's commitment to realizing superior value for our owners as well as our customers."

Agilent made the announcement the same day it announced its third quarter 2005 results, which showed the company fell slightly behind market expectations of $1.7 billion to $1.8 billion for the quarter. Third-quarter revenues reached $1.69 billion.

The company expects the restructuring to cost $200 million. Officials said the layoffs will be accomplished through a combination of employee moves from Lumileds and semiconductor business, work-force reductions and attrition.

A joint investment group of Kohlberg Roberts & Co. and Silver Lake Partners bought Agilent's semiconductor business, while Royal Philips Electronics forwarded the $950 million for Lumileds.

Officials said they aren't finished shedding divisions non-essential to its new focus on test equipment. They plan to spin off its System on a Chip test and memory test businesses as soon as practical in 2006.

From: [InternetNews]



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