Chip off the old block

6 October 2003

The spinoff should eradicate part of the US technology giant’s conglomerate discount. But shareholders should not get carried away until they understand the funding requirement of the lossmaking chip business.

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Motorola, the US technology conglomerate, said on Monday it would separate its semiconductor operations into a separate company.

The group is planning an initial public offering of shares in its Semiconductor Products Sector (SPS), followed by a distribution of the remaining shares to shareholders in a taxfree manner.

This action reflects Motorola's intention to increase its focus on communications and integrated electronic systems, the company said in a statement.

Motorola declined to disclose the cash balance and working capital requirement of the lossmaking chips unit before filing an IPO registration statement with the US Securities and Exchange Commission.

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