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Chip firm merger transfers top brass

But Pixelworks keeps its R&D operations, plant in Tualatin

With just over $100 million in 2002 revenue, Pixelworks Inc. is far from Oregon's largest company.

But, as an outfit that began niche chip making just as niche chip making was becoming cool, it may be one of the state's most symbolic businesses.

As a result, Monday's announcement that Pixelworks is merging with a larger competitor and will move its headquarters to California marks, at the very least, a noticeable tear in Portland's ever-fragile tech fabric.

Tualatin-based Pixelworks, which makes semiconductors and software for the high-end display industry, plans to merge with Genesis Microchip Inc. of Alviso, Calif. The combined company hopes to better compete with larger entities in the 'system-on-a-chip' integrated circuit market.

The term 'system-on-a-chip' refers to chips that contain all the components necessary to run certain devices. Systems-on-chips from the new company, to be called Genesis Pixelworks, will help control liquid-crystal display monitors, televisions and multimedia projectors.

The transaction is valued at about $600 million.

The merged companies' new headquarters will be in Alviso. However, most of Pixelworks' Tualatin operations Ñ the 'fabless' manufacturing facility, the research and development arm, and some sales and marketing outposts Ñ will remain in Oregon.

On the surface, the merger looks like a prudent move by Pixelworks. It is now contributing to a company that recorded nearly $300 million in 2002 revenues; Genesis Pixelworks counts $641 million in total assets, including $220 million in cash and marketable securities.

Allen Alley, the Pixelworks leader who will become the

president and chief executive officer of the combined company, said the move will bring 'higher levels of integration across all of our served business segments.'

In turn, Genesis Pixelworks believes that it will be better able to develop products for transportation and portable video uses.

On the other hand, losing a corporate headquarters always offers a hint of rejection, particularly in a local economy lately battered by company closures and massive inventory buildups.

Plus Pixelworks is a strong company: It holds a massive market share Ñ in the 90 percent range Ñ in the advanced display chip category.

The news that Pixelworks would retain its Oregon facilities encouraged Joe Cortright, a consultant with Portland-based Impresa Inc.

'Losing a headquarters has a tremendous symbolic importance, but what's important is what the company continues to do here,' he said. 'A number of the really vital parts of our high-tech industry are headquartered elsewhere. What matters more substantially is what goes on, rather than where the headquarters is.'

With Pixelworks and Alley, though, it's a bit different. Alley has long served as an ambassador of sorts for Portland's tech scene. He has served as the chairman of the Oregon Council for Knowledge and Economic Development.

'Allen is a wonderful leader, not only of a dynamic company but he's also served tirelessly in many community aspects,' said Jeffrey Grubb, who manages the Portland office of the investment firm U.S. Trust. 'He's one of our top community leaders.'

Contact Andy Giegerich at This email address is being protected from spambots. You need JavaScript enabled to view it. .