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GRESHAM, OR-Publicly held ON Semiconductor Corp. of Phoenix has agreed to acquire and continue operating a 500,000-sf chip plant here that was being offered for sale by publicly held LSI Logic Corp. of Milpitas, CA, which no longer wants to manufacture its own wafers. The agreed upon sale price for the fully operational wafer fabrication facility is $105 million; the transaction is expected to close in the next 45 days.

LSI designs high-performance semiconductors that access, interconnect and store data, voice and video. The company is transition to newer technology and a “fabless” operating model, which means it will no longer fabricate any of its own product. Much of the company’s manufacturing is already being done overseas through existing foundry partners (UMC, SMIC and ROHM Co Ltd.) in Taiwan, Japan, China and Malaysia.

LSI announced plans to sell the Gresham plant–its only US manufacturing facility–in September 2005. It tapped the Advanced Technology Real Estate Group at Colliers International one month later with hope of finding a buyer within 12 months.

The Gresham plant opened in 1998 at the heart of a 300-acre tree farm. The four-building campus includes a 242,000-sf wafer fabrication plant, a 125,000-sf office building, a 45,000-sf energy center and a 91,000-sf central processing facility.

The purchase agreement includes some of the plant’s key wafer fabrication equipment lines and calls for ON Semiconductor’s subsidiary to offer employment to substantially all of the LSI manufacturing employees at the Gresham site. In addition, LSI Logic has committed to purchase approximately $200 million of wafer supply and certain test services from ON over the next two years. The test services agreement essentially offsets much of the fixed costs ON will incur while is ramping up production of its own wafers in Gresham.

While LSI still needs the type of product produced at the Gresham Plant – .18 micron wafers – enough of its customers are demanding it pursue 65-nanometer process technology that it will no longer be profitable to operate the facility. A source at LSI told GlobeSt.com last year that the plant can still be profitable for a third-party manufacturer with multiple customers in need of the .18-micron wafers, which last year still comprised approximately 20% of all specialty chips and 34% of all integrated circuits.

The last time Gresham had a semiconductor manufacturer walk away from a plant was 2001, when Fujitsu closed its 196-acre, 825,000-sf plant. The next year, however, Chandler, Ariz.-based Microchip Technology agreed to acquire the facility for $185.3 million and reopen it. That deal also was brokered by Colliers ATREG.

LSI’s plant cost $1 billion to create, with about $300 million spent on construction. Stephen Rothrock, the managing director of Colliers ATREG, tells GlobeSt.com that the only semiconductor manufacturing facilities that have sold recently are operational ones.

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