⃞ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
⃞
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
Item
1.01. Entry into a Material Definitive Agreement.
On August 3, 2009 (the “Effective
Date”), Integrated Device Technology, Inc., a Delaware corporation (the
“Company”),
entered into a Foundry Agreement (the “Agreement”)
with Taiwan Semiconductor Manufacturing Co., Ltd., a company duly incorporated
under the laws of the Republic of China, and TSMC North America, a California
corporation (together with Taiwan Semiconductor Manufacturing Co., Ltd., “TSMC”). The
Agreement sets forth the terms by which TSMC will manufacture certain of the
Company's semiconductor products and provide certain foundry services to the
Company.
Pursuant to the Agreement, TSMC
receives a license to certain of the Company’s semiconductor process
technology. With certain exceptions, TSMC will bear all costs with
establishing facilities capable of implementing the Company’s process technology
and producing the Company’s semiconductor products.
The prices for products run on 200mm
wafers are specified for a period of five (5) years following the Effective Date
(the “Initial Pricing
Term”). After the Initial Pricing Term, the prices for such
products will be negotiated by the parties, but in no event will subsequently
negotiated prices be higher than the previously established
prices. During the term of this Agreement, TSMC has the right of
first negotiation with respect to all future business related to the manufacture
of wafers for the Company.
The Agreement will continue in effect
for ten (10) years following the Effective Date and will automatically be
renewed for additional two (2) year terms thereafter. However, at any
time following the Initial Pricing Term, the Company has the option to terminate
the Agreement for convenience upon providing six (6) months prior written notice
of termination to TSMC.
Item
2.05. Costs Associated with Exit or Disposal Activities.
On August 6, 2009, the Company issued a
press release announcing a plan to transition the manufacture of products
currently produced at the Company’s Hillsboro, Oregon fabrication facility to
Taiwan Semiconductor Manufacturing Co., Ltd. and TSMC North
America. The transition is expected to take approximately two years
to complete.
On August 3, 2009, in connection with
the plan to transition the manufacture of products to TSMC, the Company’s
management, with prior approval of the Board of Directors, approved a plan to
exit wafer production operations at its Oregon fabrication
facility. If unsuccessful in its efforts to sell the Oregon
facility to a buyer that can continue fabrication operations, the Company
estimates it will incur total charges of approximately $15 million to $25
million to exit the facility. These aggregate exit costs are expected
to consist primarily of expenses related to employee severance, retention, and
post-employment benefits, and expenses associated with the decommissioning of
equipment and the facility. The Company estimates it will incur costs
of approximately $10 million in severance, retention, and post-employment
benefits, of which approximately $4 million to $6 million is expected to be
recorded in the second quarter of fiscal 2010. Costs of approximately $5 million
to $15 million associated with closure activities related to decommissioning of
equipment and the facility are expected to be recorded in future periods as
incurred. Substantially all of the exit costs are expected to result
in cash expenditures. A copy of the press release is filed as Exhibit
99.1 to this Current Report on Form 8-K and is incorporated herein by
reference.
Forward-Looking
Statements
Investors
are cautioned that forward-looking statements in this Current Report involve a
number of risks and uncertainties that could cause actual results to differ
materially from current expectations. Risks include, but are not limited to:
global business and economic conditions; the ability to successfully transfer
products and process technologies between fabrication facilities, fluctuations
in product demand, manufacturing capacity and costs, inventory management,
competition, pricing, patent and other intellectual property rights of third
parties; timely development and supply of new products and manufacturing
processes; dependence on one or more customers for a significant portion of
sales; availability of capital, cash flow; successful integration and
restructuring of acquired businesses, technology and related employee matters;
other risk factors detailed in the Company’s Securities and Exchange Commission
filings. The Company urges investors to review in detail the risks and
uncertainties in the Company’s Securities and Exchange Commission filings,
including but not limited to its annual reports on Form 10-K for the fiscal year
ended March 29, 2009, its current reports on Form 8-K and other Securities
and Exchange Commission filings. These forward-looking statements speak only as
of the date of this Current Report and the Company assumes no obligation to
publicly release the results of any revisions or updates to these
forward-looking statements that may be made to reflect events or circumstances
after the date hereof, or to reflect the occurrence of unanticipated events,
except as required by law.