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Seiko Epson eyes cash advances by Brooktree, Lattice - cash infusion deal for manufacturing facilities

SAN JOSE, CALIF.--Seiko Epson is in discussions with both Brooktree and Lattice Semiconductor to do a cash infusion deal for its manufacturing facilities similar to the $42 million advance it recently received from Xilinx (EN, April 18), it was learned.

Seiko Epson reportedly wants to continue accumulating cash to upgrade and migrate its aging manufacturing process technology to deep sub-micron, sources close to Seiko Epson said.

Executives at both Brooktree and Lattice would not divulge the nature of discussions underway with Seiko Epson, but both companies said ongoing dicussions could yield a similar arrangement to the one Xilinx revealed.

Sources said Brooktree may invest a similar amount to the $42 million Xilinx commitment, but the amount of cash to be forwarded to Seiko Epson by Lattice remained unknown as of presstime.

Xilinx's April agreement called for an advance to Seiko Epson for manufacturing enhancements in exchange for a guaranteed amount of good die. Xilinx said the cash would be used to purchase additional equipment at the Seiko Epson facility--located 200 miles north of Tokyo.

Last week, Jerry Canning, Brooktreehs controller, told Electronic News that "The agreement (between Seiko Epson and Brooktree) has not been signed. We are still in discussion."

Mr. Canning said if such as agreement is concluded, it would be structured similar to the one between Seiko Epson and Xilinx. "Evertually, it will be charged against earnings. It is a similar arrangement. We would receive similar benefits (to what Xilinx received)--a future steady stream of wafers."

Stan Kopec, Lattice's director of marketing, said he could not confirm specific discussions were talking place, but he noted that on-going talks are regularly held with Seiko Epson.

"We have had a long-standing relationship with Seiko Epson since 1986," Mr. Kopec said. "Our relationship with Seiko Epson is not at a point where we would give details (of each a development). We have corporate meetings with them every quarter. Suffice it to say that it would be part of the planning process."

Mr. Kopec said he has not been privy to any of the ongoing dicussions with Seiko Epson, but if such a deal were struck "it would strengthen the relationship between the two companies. Our relationship with Seiko Epson is more of a partnership. if we were to enter into a more detailed relationship, I think it would be because both partners would see mutual benefits."

Postulating on the benefits to each company to be derived from such an arrangement, Mr. Kopec said across to next-generation fab capacity Seiko Epson is developing would be the major benefit.

Brooktree's Mr. Canning said the benefit to Brooktree "is that if we enter into a similar arrangement, we would receive similar benefits--a steady stream of wafers. The benefits to Seiko Espon is that they have locked into a steady customer and are able to plan for the future." Mr. Canning added that "We have not concluded a deal with Seiko Epson. I suspect when we do, we will make an announcement like the Xilinx announcement."

Two months ago (EN, Feb. 14), Brooktree, Actel and a Rockwell International unit took equity positions in a new Chartered Semiconductor Manufacturing Fabrication facility being constructed in Singapore in Exchange for guarateed wafer capacity.