Twin Cities tech executives form new company, buy Cypress chip plant in Bloomington

A group of Twin Cities technology executives, backed by a local investment group, bought Cypress Semiconductor Corp.'s wafer and chipmaking plant in Bloomington, forming a new company that hopes to expand its production.

The plant, a few blocks south of the Mall of America, will continue to produce wafers for Cypress and serve as a foundry, or contract manufacturer, of chips for about a dozen other companies. It employs about 400 people.

Cypress, which bought the plant from Control Data Corp. in January 1991 for $14.7 million, sold it this month for $30 million to Sky­Water Technology Foundry, a new company with investors led by Oxbow Industries LLC of St. Louis Park.

"It was a great opportunity to back a superior management team," said Loren Unterseher, a managing director at Oxbow.

Scott Nelson, a former top executive of Logic PD, a Minneapolis-based product design and prototyping firm, worked with bankers and Cypress representatives for more than a year to put together the deal. He is taking the role of chief technology officer for SkyWater.

Gary Obermiller, a former Deltak and Graco executive who cofounded the Minneapolis investment firm Mill City Capital, is the company's chief executive. Bart Zibrowski, a longtime finance executive in the Twin Cities, is chief financial officer.

The plant, built in the 1980s by Control Data, has 80,000 square feet of clean-room space and chiefly makes wafers that are 200 millimeters in diameter. Cypress produced about 17,000 wafers a month at the plant, shipping them to other factories around the world for use as the basic substrate for chips.

Under SkyWater Technology, the plant will continue to supply Cypress for at least three years. San Jose, Calif.-based Cypress continues to also produce wafers at a plant in Austin, Texas.

While the most advanced chipmaking processes now rely on larger wafers with a 300-millimeter diameter, Nelson said the proliferation of electronics into many types of devices shaped in part by internet connectivity has created enormous demand for chips that aren't at the cutting edge of performance and are still efficiently produced on smaller wafers.

In addition to wafers, the plant is producing chips as a contractor for uses as varied as medical devices and photonics. It has been accredited by automotive makers and the U.S. government for both unclassified and classified use.

"This fab is in a space that's not viewed as obsolete at all," Nelson said.

At Logic PD, Nelson in recent years was involved in a number of "Internet of Things" projects, in which the firm helped manufacturers put chips and software into products, even a basketball.

He said he spoke to several prospective financial backers but quickly zeroed in on Oxbow, which has a diverse portfolio of manufacturers including a maker of artificial Christmas trees and a firm that designs the label interfaces used on products.

"Oxbow was the right fit from a manufacturing mentality and a regional technology mentality," Nelson said.

Unterseher said Oxbow was impressed by the SkyWater management team and the plans for the plant. "What we like to say is 'Their vision, our capital,' " he said.

The plant is one of three chip factories in the Twin Cities.

Polar Semiconductor Inc., a unit of Sanken Electric Co. of Japan, operates in another former Control Data chip factory a few blocks east of the Mall of America. Honey­well operates a chipmaking plant in Plymouth.

Alex Van Abbema is a University of Minnesota student on assignment for the Star Tribune.