Cypress Semiconductor Corporation makes the processors and chips that go into computers, phones, and other integrated electronic devices. Cypress' product portfolio has two segments. First, there are commodity products for timing and communication - an example is a USB controller integrated into a mouse or a digital camera, allowing communication between the device and a computer. Cypress also sells newer programmable chips that can conduct multiple tasks at lower cost since they combine functionalities spread across multiple chips.^[1] These newer devices can compute and communicate for devices such as mp3 players, laptop computers, and other household appliances. The majority of Cypress' revenues still come from the legacy business, although the company's focus is to develop the higher-margin programmable chip business.

CY is also the majority shareholder in SunPower (SPWR), allowing Cypress to claim the subsidiary's revenues as its own. The SunPower ownership gives it exposure to the solar market that has performed robustly in the face of rising Oil Prices. In 2007, SunPower earned nearly as much revenue as the core chip making business, and it has grown much more rapidly than the chip business since 2005. It is unclear whether Cypress will continue to hold onto its stake, as it has been selling off its ownership to fund its core chip business over the last several years, most recently selling 7.5 million SunPower shares in Q1 of 2007.^[2] Currently Cypress owns 51% of Sunpower, and if this stake drops below 50% the company will no longer be able to include Sunpower's revenues in its own financial statements.

From a manufacturing standpoint, the majority of Cypress' work is conducted in-house, with only a small portion outsourced to foundries, in contrast with many competitors such as QUALCOMM (QCOM) or Broadcom (BRCM) that have switched to "fabless" outsourcing to foundries. This leads to a higher cost structure for Cypress, since it must handle its own manufacturing. However, it also means it does not have to invest capital into designing processes and products that meet foundry requirements for outsourcing.

(Read more at Wikinvest )