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Why United Technologies Sold Its IC Business to Aeroflex for $46 Million

United Technologies agreed in 1998 to sell its specialized UTMC chip operation to Aeroflex for $46 million cash. The reports describe its defense and aerospace products, but do not confirm the sale closed in 1999.
From TheFinanceBase Team2 min to read
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United Technologies Corp. agreed on November 18, 1998, to sell its United Technologies Microelectronics Center (UTMC) to Aeroflex Inc. for $46 million in cash. The sale was expected to close in early 1999, subject to a final agreement and government approval, but the contemporaneous reports cited here do not confirm that it actually closed.

What United Technologies agreed to sell

The asset was UTMC, a specialized integrated-circuit operation in Colorado Springs, Colorado—not all of United Technologies or its broader aerospace business. UTC created the center in 1980 after acquiring Mostek as part of an effort to become a major semiconductor company. After heavy losses in dynamic random-access memory (DRAM), UTC withdrew from commercial chip markets during the 1980s, while UTMC continued supplying chips for defense and aerospace applications.

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In its November 18, 1998 report, EDN reported that UTMC had $34 million in IC sales in the preceding year. That figure describes the operation’s sales, not the amount UTC received from the sale.

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How much Aeroflex agreed to pay, and why

Aeroflex agreed to pay $46 million in cash. The amount was the announced transaction price; the cited reports do not establish a later closing date or confirm that the payment was completed.

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Aeroflex said UTMC would add semiconductor capability to its microelectronics business. Executive vice president and chief operating officer Leonard Borow described the acquisition as a building block in a strategy to provide more content in communications platforms, particularly satellite communications. He said UTMC’s intellectual property would let Aeroflex offer silicon integrated circuits alongside the microelectronic modules and interconnects it already supplied. EE Times quoted Borow’s explanation in its November 18, 1998 report.

What UTMC made

UTMC supplied semicustom and standard very-large-scale-integration (VLSI) circuits for defense and aerospace customers. Its portfolio included products for MIL-STD-1553 and radiation-hardened devices.

MIL-STD-1553 products

MIL-STD-1553 is a military avionics data-bus standard. UTMC’s products supporting it served systems that needed components designed for use with that standard; the available reports do not identify particular chip models or provide product specifications.

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Radiation-hardened devices

Radiation-hardened devices are designed to withstand radiation exposure that can disrupt ordinary electronics, making them relevant to space and other demanding aerospace environments. The contemporaneous coverage identifies UTMC as a supplier of such devices but does not give performance ratings or name specific parts.

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Did the sale close in 1999?

The November 18, 1998, reports said the transaction was expected to close in early 1999 after a final agreement and government approval. An expected closing is not proof of a completed sale: the cited EDN and EE Times accounts do not establish the actual closing date. Aviation Week’s November 30, 1998 item also identified the $46 million cash consideration and UTMC’s role in radiation-hardened and semicustom VLSI, but its full text is subscription restricted.

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