High-tech manufacturer SemiSouth Laboratories closes after decade-plus run

SemiSouth Laboratories has ended operations after years of success, expansion.

SemiSouth Laboratories has ended operations after years of success, expansion.

After a seemingly successful run of more than a decade and two recent, major expansions, SemiSouth Laboratories is now shuttered, and its equipment is up for sale.

The announcement last October that SemiSouth would cease operations came as a major surprise to many, including officials at Mississippi State University where the semiconductor manufacturer was based.

David Shaw, vice president for research and economic development at MSU, said in a statement that he “was surprised as everyone else” by SemiSouth’s closing.

While obviously unsurprised by the shutdown, Balu Balakrishnan, president and CEO of San Jose, Calif.-based Power Integrations, the parent company of SemiSouth, still found the closure a bitter pill. He attributed the company’s demise to SemiSouth’s industry and market where staying ahead of the technology curve is financially dangerous — and potentially fatal.

“The expected closure of SemiSouth is disappointing, but reflects the challenges and risks inherent in the quest for disruptive technologies,” said in a Balakrishnan statement.

The shuttering was more shocking to most because the news from the high-tech firm had been so rosy for so long.

SemiSouth was founded by former MSU faculty member Jeffrey Casady and current MSU electrical and computer engineering professor Michael Mazzola in 2001.

Five years later, SemiSouth moved into its expanded facility in MSU’s Thad Cochran Research, Technology and Economic Development Park.

“The completion of this facility is a major milestone for both SemiSouth and Mississippi,” Casady told the MBJ in a September 2006 article. “This opening marks the debut of the first major semiconductor (microchip) manufacturing facility in the state and provides a solid example of homegrown high-tech economic development.”

By 2007, SemiSouth had grown from a two-man concern to a firm employing approximately 45 workers, nine of whom held PhDs. Scientists, engineers and technicians represented corporations such as IBM, Texas Instruments, Sony, Motorola, Intersil, among others.

In 2008, Innovate Mississippi (formerly Mississippi Technology Alliance) inducted Casady into its Mississippi Innovators Hall of Fame.

In 2009, SemiSouth’s breakthrough product, a SiC JFET, was adopted for the first time by a consumer electronics company for use in a new audiophile-quality power amplifier. And in that year alone, the firm was awarded three patents, bringing its total to 18, which was seen as a milestone in advancing SemiSouth’s intellectual property value.

In less than a decade, the firm had invested $40 million in facilities and equipment and was attracting significant attention, especially from Power Integrations.

In 2010, Power Integrations entered the picture, promptly investing some $30 million in SemiSouth. This was in addition to $20 million raised from venture capital investors and $30 million from federal grants and contracts.

The following year, SemiSouth announced an international stocking distribution agreement with UK-based Premier Farnell plc, representing the firm’s first major catalog outlet.

In March 2012, an investment of $18 million was announced, and employment, then at 115 workers, was expected to rise to as many as 230 workers over the next 18 months.

More good news followed in May 2012 when SemiSouth was awarded its 30th patent. This brought the firm’s total number of patents to 54 with another 204 applications pending worldwide.

This coupled with the two expansions in an 18-month period made SemiSouth look like a world-beater.

Five months later, it was closed and plans were being made to sell all of the firm’s equipment, some of it almost brand new from the expansions.

Mississippi State’s biggest hit from SemiSouth’s closing is the loss of a tenant at its Thad Cochran Research, Technology and Economic Development Park and the corresponding rental income.

MSU had previously deeded SemiSouth’s intellectual property rights, carrying a 2 percent stockholder equity, to MSU Research and Technology Corp., a non-profit organization.

However, the closure meant a major financial blow for Power Integrations. Financial results for the quarter ended Sept. 30, 2012, included a pre-tax charge of approximately $60 million, resulting in a net loss on a GAAP basis.

Perhaps the hardest hit was the 90 workers who were left jobless by the closing.

>>CONTINUE READING SemiSouth Laboratory equipment goes on auction block

 

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