Just after 9 months since 2016, but for the global semiconductor industry is a major m&a action after one year. What the difference is that while the number of deals fell, but the scale is huge, such as Softbank (t) to $32 billion in cash for the ARM.
As the value of continued ascension, and now the question is who's left is worth being bought? What a good acquisition targets?
Chip market's overall growth slowed, increasing cost, venture capitalists gradually reduce the investment for the semiconductor industry, plus interest rates fell, all of these are attracting chip suppliers to make acquisitions.
IC Insights senior market research analyst Rob Lineback, points out that "persist in 2016 'hangover effect (hangover effect). Many companies are still fierce competition for market position, and actively respond to the acquisition of 2015."
In other words, "there's still a surface of a wave of takeover." In addition, he concludes: "those who failed in the takeover of the company seems to be the purchasing target. This may need a years to break down."
Selective?
PricewaterhouseCoopers (PwC) two advisory division - semiconductor always consult Rakesh Mehrotra, trading and technology director Rob Fisher in recently said in an interview, "there is still enough space for mergers and acquisitions (M&A), as a result, the trend of a wave of mergers and acquisitions also is expected to last, but the speed will be a little slow than in the past 18 months."
The same scale of medium-sized companies will be through the merger scale, and fails to carry out its acquisition, offer a good themselves can also be a larger company bought by objects."
It is important to note that the top 20 rankings listed in table 1 (season 1, 2016), there are many big chip suppliers over the past 18 months have experienced large-scale mergers and acquisitions.
The EE Times interviewed a number of industry analysts and market observers, explore the future who else is worth buying. In the following content will list the company name, and aiming at the existence of the purchase demand.
Two big acquisitions battlefield
Let's cut to the chase directly! What technology or market demand in the field of maximum?
PwC Mehrotra and Fisher simply induces two fields: 'analog/mixed-signal' technology 'and' server/data center market.
More than analog/mixed-signal technologies is the "Internet of things (IoT) market is the key to success, because the market demand can accurately measuring and monitoring the real world of the signal, and efficiently manage power consumption, especially for battery-powered devices."
Moreover, "the market segment and more differentiated, very suitable for certain transactions. Last year the market segment of merger and acquisition activity is relatively less."
By the IoT coverage level is very wide, the scope of merger and acquisition activity may involve a variety of technical fields. Semico Research President Jim Feldhan said, "if a company wants to launch for IoT application portfolio of products, may need to be used to connect/wireless analog technology, embedded visual, power management, sensor/MEMS and security components and even microcontroller (MCU), etc."
He added, "and MEMS sensor market has been in continuous development. Last year, many companies have the technical orientation for sensor fusion, and the wind blowing a burst of m&a."
IHS Markit responsible for senior analyst Jonathan in the field of power semiconductor Liao agrees, and says, "IoT actually covers from incandescent bulbs to container ships, each kind of application can be connected to the Internet." Bullish on IoT in the formulation of company merger and acquisition strategy may need to be more diverse and more narrow to a particular target.
In addition, may contribute to more mergers and acquisitions of the second segment is the server/data center.
PwC consulting division, said "microprocessor manufacturers are racing to dominate the market, make it become an important battlefield another wave of mergers and acquisitions."
Naturally, "in order to obtain a programmable hardware acceleration technology in reinforcing its processors, processor makers may actively acquire the FPGA technology." In particular, the target can be in emerging and increasingly competitive ARM server market, is also likely to attract more attention."
Who finished shopping list?
Feldhan said, now, "almost any company could become the object of acquisition or merger."
Lineback said, in general, "the best candidate for the acquisition of object seems to be a medium-sized IC suppliers, its sales under 1 billion dollars (especially in medium-sized companies around $500 million), and the power management, wireless communication and embedded market leading companies in the field of processing solutions." IC
And he added, "as time progress, the suitable targets will be less and less, it will be to seek growth through acquisitions and expand business companies bring certain pressure."
With Renesas electronics (Renesas) in a few weeks ago announced the acquisition of Intersil for $32, the end of the 'continued negotiations' status for quite a long time, let's start by many analysts still bullish on several companies started!
Maxim Integrated Products
As Deutsche Bank, Deutsche Bank analysts wrote in a recent research report, "we still believe that slow growth and rising costs in the field of semiconductor is pushing for the consolidation of long-term trends, there will be more such deals." They selected "Maxim" and says "the company has always been the best acquisitions. We think"
Indeed, there are often the rumours Maxim become takeover targets.
Lineback describe Maxim hesitant ambivalence in the m&a market at present: "Maxim is not to prepare for the takeover plan. But the company still willing to discuss the possibility of a buyout by TI or ADI."
Any transactions generally believe that aim at Maxim is very high price, "and this is also the reason of TI and ADI away." Lineback, therefore, argues that "ADI to spend $14.8 billion for LingLiEr Technology (Linear Technology)."
IC Insights, however, "there are still some hope, to see what the TI will take action, in order to continue in the leading position in the analog/mixed-signal IC market."
Xilinx
Semiconductor m&a world is perhaps the biggest trophy game spirit (Xilinx).
As Feldhan explains, "the attraction of the Xilinx, like Intel (Intel) found Altera object is a good buy." Xilinx programmable structure for application server applications and communications infrastructure market is extremely valuable.
, "said Feldhan Qualcomm, Qualcomm is servers and infrastructure for its products to try the water temperature, Xilinx happens to be a good asset. But we think it's going to come up with a Xilinx Altera than higher prices, and Qualcomm at this time is unlikely to undertake such large-scale capital investment."
There's no doubt that Xilinx's market value is very high, in August of this year's revenue reached $13.73 billion.
Last year, Intel's $16.7 billion takeover of Altera. Intel said it expects the acquisition to form integrated processor of FPGA technology, in order to data center and IoT market with new products.
Lineback pointed out: "for server processor, communication and some IoT applications", programmable logic is a hot area of interest. If qualcomm to rival Intel acquired Altera deal, he believes that qualcomm - Xilinx trading will be "meaningful".
But in fact, Xilinx attraction of qualcomm, the company is committed to "blend in the SoC processor embedded system (IoT, unmanned aerial vehicles (uavs), wearable device) and the server. This means that the market is a demand for programmable logic, especially if Intel is also working in this direction."
Lattice Semiconductor
Like Xilinx programmable logical business is very popular, Lineback, said: "Mr Dean Semiconductor (Lattice Semiconductor) programmable logic is also being acquired popular targets."
According to reports, in February, Mr Dean "is discussing with investment bank Morgan Stanley (Morgan Stanley) interest from potential buyers, including a Chinese company."
According to the securities and exchange commission (SEC), 13 d file, as of may this year, by the Chinese government support technology group, Tsinghua university International (Tsinghua International) has laidi, of 10295154 shares, about 8.65% of all common stock.
Not to mention the intervention of the Chinese company, Mr Dean is not only a programmable logic. Feldhan said, watch the IoT application of dean "in terms of capital investment is also very strong."
Indeed, Lineback think, laidi besides programmable logic product line, in the special application of standard products (ASSP) has also its own. Lineback explanation, laidi spent around $607 million in 2015 to buy crystal ç} technology (Silicon Image) made ASSP products, include consumer connection solution for the next generation of wireless networks, such as the use of millimeter wave (mmW) in WiGig technology.
When Mr Dean has to buy Silicon Image, laidi, executive Darin Billerbeck issued a "life cycle" of the story. He explained that the merger "semiconductor industry opened a good start," the company also has the complementary of FPGA and ASSP.
Silicon Labs
If you focus on IoT domain, then the core department of science and technology (Silicon Labs) is currently has widely IoT product portfolio and still independent one of a handful of companies.
Lineback stressed that the Silicon Labs "has always been a good acquisition targets, because it is in the past 10 years, only a quarter loss (season 1 losses of $2 million, 2011). And the company has powerful technology related to IoT, including wireless mesh network solutions (ZigBee and Thread), and low power consumption MCU based on 32-bit ARM, sensors and other products."
In the field of IoT, Silicon Labs is famous for its good performance of the m&a strategy. Once the company acquisition of companies ZigBee Ember in 2012 and 2012, acquisition of companies located in Oslo, Norway, efficient MCU Energy Micro and acquisition of Finland in 2015 wireless module suppliers Bluegiga Technologies, to further enrich IoT product portfolio.
However, Silicon Labs is not just the advantages of hardware. More importantly, it has its own software development tools.
(Broadcom) as Broadcom IoT development team [last year by the plath (Cypress) takeover], Silicon Labs, such as radio abstract interface layer (RAIL) and for special application software design of wireless networks (called the Connect) tools such as software stack as a IoT products popular key.
But Silicon Labs is not cheap. Lineback, points out that the market capitalisation of the company in August this year has reached $2.4 billion, the "has become one of the potential buyers did buy expensive big obstacle."
Marvell Technology
Don't often hear Marvell Technology industry become a takeover target, but for some buyers, the company provides interesting Technology actually.
Lineback said, "now financially difficult Marvell has suitable for cars, cloud computing system, IoT and multimedia application processor and SoC solutions, as well as the many innovations in terms of memory, such as FLC and IC structure optimization, and its modularization chips (MoChi) way."
For Marvell, the disadvantage is that the continued presence of losses, and out of the smartphone market (application processor and connection solution) ", "he explains.
In activist hedge funds Starboard Value about 6.7% stake after Marvell, Starboard invited in June this year worked as executives at Maxim's Matthew Murphy took over as the new chief executive and President of Marvell. Murphy, for the past 22 years in the Maxim of sales and business unit leadership roles.
Likely to split the Starboard Marvell part of the operation of the business, or sell the whole department, however, the next action has not been released.
Integrated Device Technology (IDT)
The next step is IDT. IDT former CEO Ted Tewksbury with Starboard activist hedge funds for up to 18 months of bitter between Value, is a well-known fact.
But before the Starboard targeting IDT, it has long been regarded as a company operating the steady. As Lineback says, "over the years there have been reports that IDT become a takeover target - even in the 1990 s."
Under former executive supervision, IDT rely on their own core competitiveness, temporal element, steadily expanded its product line, including radio frequency (RF), wireless charging and RapidIO. In succession after the Starboard intervention, however, the company will flash memory (flash) controller to sell to PMC Sierra, intelligent electric meter business sell Atmel, converter and high speed data business to Apple (Apple). If the IDT retain high speed data converters, Tewksbury think IDT "is likely to be in the 4.5 G and 5 G market."
Look in Lineback, IDT since December last year for $307 million is located in Germany, stearns ZMDI, the attraction of the company.
It is well known that ZMDI strengths lies in the areas of automotive and industrial markets. Lineback, explains IDT "now has a more extensive semiconductor product mix, to serve the communication infrastructure, automobile, wireless power supply and data center server and high-performance computer market."
Lineback think, according to the company's market capitalization of about $2.7 billion recently, acquisition of IDT about have to spend more than $3 billion. The IDT around the annual revenue of $700 million, he said. However, after a few years ago after the loss of the IDT has 12 consecutive season remain profitable."
other
Often legend could become targets of other companies with Skyworks, Macom and Qorvo. Feldhan said. "these are analog components company, its action application products should be very attractive, such as RF and power management."
, "he added," these companies have their own fabs, but they also use contract part. Buyers can see these factories as assets, but in today's market, also could be seen as a burden of capital."
Besides the three Lineback think you can add "can be used as a long-term goal of IDT, sensor supplier company, analog mixed-signal/RF IC supplier MaxLinear and Power management chip maker Power Integrations (PI), etc."
These companies "in the service in a variety of niche markets embedded electronic products have their own strengths," Lineback said, "a new type of wireless connection by IoT, and data center system -- they can provide part of the IoT and cloud computing services, including cars and energy management system."
conclusion
Semiconductor industry growth is inevitable, after all, for the chip suppliers, at present most of the target market has matured.
PwC consulting division Mehrotra and Fisher said in these mature areas, automotive and industrial/medical are an exception. Responsible for the semiconductor company "because of the higher share in the growing areas, thus will help a large number of deals, making it lit the hope of leading in the competition in the market."
This is a key issue. "Moore's law (Moore 's law) progress has slowed, rising cost of development and manufacture of complexity," Mehrotra and Fisher explains, "under the pressure of company must control the product cost, increase investment in research and development (R&D) is more risky proposition. From the general and administrative expenses (G&A) point of view, is a huge deal merger synergy, can be used to fund the rising cost of research and development (R&D)."
"This will lead to many semiconductor companies seeking merger in order to obtain scale advantage, and keep the earnings."
Another important driving forces for the m&a action is China. Lineback said, "in order to reduce the dependence for foreign imported IC, China is also committed to promote mergers and acquisitions. Thunis (Tsinghua Unigroup) and the Chinese investors alliance has been the United States, Europe and other parts of the water temperature, but the threat of law review has hindered the major acquisitions of some potential."
Another factor is low rental costs, Liao said, "if the federal commission or the European central bank will increase interest rates to 3% of normal levels, history acquisition activity will be dramatically reduced."
