The Department of Justice filed an antitrust suit late Thursday against Irvine chipmaker Microsemi Corp. claiming that the company’s $25 million buy of Costa Mesa-based Semicoa Semiconductors Inc. in July creates a monopoly on certain types of chips.
The complaint focuses on small signal transistors, chips that amplify electrical signals.
The government said Microsemi raised its prices “significantly” after the deal and that certain government customers couldn’t find any substitutes that met the military’s specifications, an Associated Press report said.
It also alleges the company “threatened to impose on these customers less favorable terms of service than were provided before the acquisition.”
The government is seeking to undo the deal and sell off the assets that Microsemi bought from Semicoa, which included millions of dollars of equipment at its 47,000-square-foot Costa Mesa chip plant.
Shares of Microsemi were down about 10% in midday New York trading with a market value of about $950 million.
In a statement Friday, Microsemi acknowledged the suit and said it “intends to aggressively defend its position.”
The company also gave more specifics about the deal.
It said revenue generated by the Semicoa assets from the sales of the products covered in the complaint totaled about $8 million.
Microsemi’s saw roughly $500 million in sales last year.
Thomas Weisel Partners analyst Tore Svanburg said in a note to clients that “it’s too premature to make any conclusions as to the business impact of this lawsuit.”
“While we do not foresee any near-term impact on revenues from this lawsuit at this time, it could result in increasing legal expenses,” Svanburg said.
He said that Microsemi is set to see roughly $12 million in additional yearly revenue from Semicoa’s assets.
Microsemi and Semicoa make what industry insiders call “high reliability” chips, which go into devices that need to perform under extreme conditions in which failures can be very costly.
In addition to the government, both sell chips to nearly the same group of top defense contractors, including Northrop Grumman Corp., Lockheed Martin Corp., Boeing Co., Raytheon Co., General Dynamics Corp. and Honeywell International Inc., among others.
