Agilent Spinoff Begins Business as Avago

On Thursday, Hewlett-Packard Co.s original semiconductor business will have a go of it yet again.

Avago Technologies, which spun out of Agilent Technologies, which in turn spun out of HP in 1999, began operations on Thursday as the worlds largest privately held fabless chip company.

The firm will employ 6,500 employees worldwide, with headquarters on San Jose and Singapore. Revenue is expected to total $1.5 billion during 2005.

Agilent sold its chip business for about $2.65 billion this past August to a team of investors including buyout specialists Kohlberg, Kravis, and Roberts, Silver Lake Partners and GIC, a Singapore government agency.

Like Analog Devices and National Semiconductor, two companies with histories in analog and mixed-signal components, Avagos product portfolio is decidedly bland: the company claims it leads the market for infrared transceivers and optical mouse sensors, as well as photo-IC optocouplers and filters used in wireless devices.

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The group is also responsible for the printer ASICs that at one time drove HPs printer line.

"It captures all of the IP capability of a highly diversified set of technologies and products," said Dick Chang, the companys president and CEO, in an interview Thursday.

"Were not a pure-play optoelectronics house, not just a RF, microwave, CMOS graphics or CMOS MPU house. We have capabilities in all sorts of fields."

This is the second time Chang has held the reins of the company; he served as chief executive from 2002 until 2004 as head of Agilents chip group, when he was replaced by Young Sohn, a veteran of Quantum and Oak Technology.

Chang returned to the CEO chair in March, when Sohn left to pursue other interests.

"I think that during the first round, when I took over for Bill Sullivan in 2002, we did a lot of cleaning up," Chang said.

"We were heavily focused on the telecom business. With the bubble bursting, we had to adjust our portfolio focus to be more balanced. I think at the time we were 60 percent telecom.

"Today were more like 40 percent," Chang continued. "Weve created new initiatives in wireless handsets, CMOS image sensors and optical navigation products. This time around we see great opportunity in all of our sectors."

Avago estimates that 36 percent of its 2005 revenues derived from sales of data communications products, with 18 percent and 16 percent of sales going to the wired and wireless markets, respectively.

The remaining 19 percent and 11 percent of 2005 sales should be split between the military and consumer-electronics sectors.

Next Page: Avago looks to mobile phones.