Source: Semiconductor Industry Watch
Author: Du Qin DQ
Since the past year, the semiconductor industry has been in a downward cycle, facing challenges such as falling market demand, oversupply, and increased price competition. However, in this period when the overall performance of the industry is weak, what is surprising is that mergers and acquisitions in the semiconductor sector continue to be active. What is particularly remarkable is that domestic semiconductor companies are participating in the wave of acquisitions. These mergers and acquisitions show the urgent need for enterprises to enhance competitiveness and drive business growth through mergers and acquisitions. They also reflect the confidence and strategic plans of enterprises in the future development of the industry.
Mergers and acquisitions of international semiconductor companies continue
The reach of tech giants continues to expand into the chip field, and Microsoft is a representative. On January 9, 2023, Microsoft announced the acquisition of DPU chip startup Fungible. Microsoft will apply Fungible technology to its Azure cloud platform data centers. In recent years, cloud vendors attacking DPU is an important trend in the current technology industry. A DPU is a hardware device specially designed for data processing and network acceleration. It can provide high performance and low latency data processing capabilities in fields such as cloud computing, artificial intelligence, and big data. Microsoft's acquisition indicates its long-term investment in data center infrastructure and strengthens its technology and product range. This is another acquisition of data center hardware startups by Microsoft following the acquisition of Lumenisity Ltd., showing the importance it attaches to data center technology and its intention to develop it.
In the field of semiconductor equipment, on January 31, 2023, CoHU, a global semiconductor equipment and service provider, announced the acquisition of semiconductor test sorter automation equipment supplier MCT Worldwide. Cohu will use the acquisition to develop new test automation solutions to support advanced packaging in panel testing. On February 1, 2023, Japanese semiconductor test equipment company Advantest announced the acquisition of Taiwanese printed circuit board manufacturer Xingpu Technology. The acquisition will provide Advantest with advanced test board manufacturing capabilities and expand its business in Asia.
The field of wafer foundry
On February 2, 2023, semiconductor product supplier MACOM announced that it would acquire the assets and operations of OMMIC SAS, a semiconductor manufacturer in the field of wafer manufacturing and epitaxial, for about 38.5 million euros through its French subsidiary, to enhance wafer production capacity and expand product supply to higher millimeter wave frequencies. OMMIC SAS is capable of manufacturing gallium arsenide (GaAs) and gallium nitride (GaN) compound semiconductors.
On February 9, 2023, Gexin announced the acquisition of Renesas' Conductive Bridged Random Access Memory (CBRAM) technology, a low-power memory solution with low power consumption, high read/write speed, low manufacturing costs, and resistance to harsh environments, for home and industrial IoT and smart mobile device applications. CBRAM technology was originally owned by Dialog. In 2020, Gexin signed a license agreement with Dialog, but Dialog was acquired by Renesas in 2021, and now Gexin has acquired this technology from Renesas.
On February 16, 2023, Ansenmei officially acquired Gexin's 12-inch fab in New York State, USA. Thousands of employees in the original factory have transitioned to Ansenmei. The acquisition will transform the Ansenmei wafer process from 200mm to 300mm, and obtain process technology and licensing agreements related to GG Core.
The field of automotive chips
Automotive chips are one of the few bright spots where the semiconductor market is currently growing. This is enough to show the development potential of the automotive chip market. In this favorable context, participants in various automotive chip fields are actively preparing to continuously improve their strength through frequent mergers and acquisitions to meet rapidly developing automotive technology needs.
Among many automotive chip manufacturers, Infineon in particular has acquired the most frequently. In the past year alone, Infineon has acquired 3 companies covering a wide range of fields. The CEO of Infineon said in an interview at the end of 2022 that the company had prepared 1 billion euros for the acquisition.
▪️ In July 2022, Infineon acquired NoBug, an engineering company that mainly provides verification and design services for digital functions in semiconductor products.
On March 2, 2023, Infineon announced the acquisition of the Canadian company GaN Systems for $830 million. This is the biggest deal in the power GaN industry to date. The $8.3 billion purchase price accounted for about 18% of Infineon's power electronics revenue, four times more than the value of the entire power GaN market in 2022. This shows that Infineon wants to take advantage of GaN's growth potential and reinforce its leadership position in power electronics. By acquiring GaN Systems, Infineon Technology has obtained not only the company's technology, but also professional talent. Since its establishment in 2008, GaN Systems has trained around 200 employees through device production in collaboration with TSMC, who have basic skills in design, process, and R&D. This provides significant added value to Infineon.
On May 16, 2023, Infineon also announced that it had acquired 100% of the shares of Imagimob AB, a startup headquartered in Stockholm, Sweden. Imagimob is a leader in the rapidly growing micro machine learning and automated machine learning (TinyML and AutoML) market, and Infineon intends to enhance TinyML edge AI capabilities on its microcontrollers and sensors through imagimob's software. Integrating AI functions in MCU has become the common goal of many MCU manufacturers.
On March 22, 2023, Renesas Electronics announced the acquisition of Austrian semiconductor company Panthronics, a company focused on near field communication (NFC) technology. NFC technology is widely used in the automotive market, and most of the leading automotive manufacturers have already deployed NFC early through acquisitions. Renesas will also be an important player in this field through the acquisition of Panthronics. Renesas Electronics will expand its connectivity technology product portfolio to further expand into fields such as fintech, the Internet of Things, and automotive applications. The acquisition is expected to close by the end of 2023, subject to regulatory approval and other closing conditions.
Referring to the automotive chip sector, Qualcomm has shown a strong offensive in recent years, especially when growth in the mobile phone market is weak. Qualcomm is actively strengthening its strength in the automotive chip field and improving its business through acquisitions. On May 8, 2023, Qualcomm announced the acquisition of Israel's Autotalks, which focuses on special chips for connected vehicle communication technology (V2X), aimed at reducing collisions and improving maneuverability to improve vehicle safety. Qualcomm plans to integrate Autotalks' solutions into its Snapdragon Digital Chassis product portfolio to further grow its automotive business.
EDA & IP, software and other fields
EDA tools play a very important role in the chip industry chain. EDA supports chip design, verification, physical implementation and production processes to help speed up the chip development cycle and improve design quality. To meet growing design complexity and market demand, the EDA giants have been adopting mergers and acquisitions strategies to drive the development of the industry and its own growth.
In May 2023, EDA giant Cadence made a low-key acquisition of PulsiC, an EDA company in Bristol, England. The terms of the acquisition have not been publicly disclosed. Cadence and Pulsic have collaborated for many years, including their recent shift to a licensing model based on freemium. Cadence is a technology company with a market capitalization of 55 billion dollars (44 billion pounds), mainly engaged in the development of electronic design automation (EDA) software. PulSiC is an EDA software company with a history of more than 20 years that focuses on providing solutions for chip design on advanced custom nodes.
It's not just EDA software vendors that are expanding through acquisitions. Some suppliers in other semiconductor fields are also strengthening their acquisitions in the EDA sector to help these manufacturers provide more complete, integrated solutions and provide customers with more efficient workflows.
On January 13, 2023, IP supplier Arteris acquired an EDA company, SEMFORE. Arteris was founded in 2003, mainly provides NoC (Network on Chip) chip-on-chip networks, and was independently listed in October 2021. Automotive SoC chip manufacturers such as Mobileye, Horizon, Xinqing, Cambrian, Xinchi, Black Sesame, Jiefa, and Chenxin all have Arteris IP behind them. Semforet is a leading supplier of hardware/software interface (HSI) technology. Semfore's EDA tool automatically generates SoC views required for hardware design and hardware-related software development, including device drivers, firmware, validation, and documentation. The unified view and automation of this critical SoC integration layer enables customers to accelerate hardware software development and reduce the risk of costly SoC redesigns.
On February 23, 2023, Keysight announced the acquisition of Cliosoft, which specializes in managing design data, including functional IP blocks used in integrated circuits. The acquisition of Cliosoft expands Keysight's EDA software products and adds process and data management (PDM) capabilities. The merged company will continue to provide version control and data and IP management solutions through EDA industry relationships including Cadence, Empyrean, MathWorks, Siemens EDA, Silvaco, and Synopsys environments. This acquisition is an important step for Keysight, which connects the world of protection, and will help customers digitally transform and meet future challenges.
In April 2023, the US industrial group Emerson Electric agreed to buy National Instruments (National Instruments) for 8.2 billion US dollars. The acquisition will strengthen Emerson's position in the automation industry and drive its growth in the field of test and measurement. Through this acquisition, Emerson will further expand its terminal market share and diversification, using National Instruments' software-connected automation systems as a profit driver. The M&A deal will also bring complementary software and innovation capabilities to accelerate the creation of high-value industrial technology portfolios. The deal is expected to close in the first half of Emerson's fiscal year 2024.
On May 17, 2023, simulation software vendor Ansys bought an EDA vendor, Diakopto, which focused on helping solve key problems caused by layout parasitic effects. Semiconductor designs are increasingly using advanced process node technology, where interconnected parasitic effects limit the performance, reliability, and functionality of the design. Diakopto's products have been adopted by dozens of customers, including tier-1 semiconductor companies, for a wide range of applications.
Should local semiconductors also join the wave of mergers and acquisitions?
Against the backdrop of intensifying competition in the global semiconductor industry, domestic semiconductor companies are expanding their technical capabilities and product lines through mergers and acquisitions, and a new wave of mergers and acquisitions in the domestic chip industry chain seems to be beginning.
On January 20, 2023, Zhonghuan, a subsidiary of TCL Zhonghuan, took the lead in increasing capital by 4.875 billion yuan to acquire 100% of Xinxin Semiconductor's shares. Zhonghuan Leading is the semiconductor silicon chip shipper with the highest number of shipments in mainland China up to now. Xinxin Semiconductor is mainly engaged in the manufacturing business of 8-inch and 12-inch semiconductor silicon wafers, and its product applications are mainly in advanced process directions such as logic chips and memory chips. After the two companies are integrated, the total planned production capacity of 12 inches will reach nearly 1.3 million pieces/month.
Mergers and acquisitions in the domestic analog chip field have begun to become active. On May 27, 2023, analog chip company Sripu issued a suspension notice and is planning to acquire Chuangxin Micro. Srip's products include two categories: signal chain analog chips and power management chips. Chuangxin Micro mainly produces battery protection chips and power management chips. On March 15, 2023, power management chip manufacturer Jingfeng Mingyuan acquired 38.87% of Nanjing Lingou Chuangxin's shares. The core product of Ling Ou Chuangxin is an MCU chip. Earlier, on June 6, 2022, domestic automotive sensor chip supplier Lu Jie acquired 76.90% of the shares of Juxun Semiconductor Technology (Shanghai) Co., Ltd.
Domestic EDA manufacturers have also gradually developed and expanded their presence through acquisitions and investments over the past few years. On May 22, 2023, Xin Huazhang participated in the strategic investment of Israel's automotive electronics EDA company Optima Design Automation. This is another major strategic move following the merger and acquisition of Shunyao Electronics in September last year. On December 16, 2022, EDA startup Riguanxin announced the acquisition of Xinyun Microelectronics, which has accumulated many years of technical experience in DRC physical verification. On October 18, 2022, Huada acquired Cindar Technology for $10 million in cash in nine days. Cindar Technology is developing memory/IP characteristic extraction tools.
Meanwhile, Anshi Semiconductor (Nexperia) is also working to acquire the British compound chip factory Newport Wafer Fab. It is reported that Anshi Semiconductor is seeking help from the US law firm Akin Gump, hoping to overturn the opposition of the British government.
Write it at the end
Mergers and acquisitions in the semiconductor industry are still surging undercurrent. At the end of 2022, the CEO of lithography giant ASML said that countries are competing to build chip factories in their own countries and are optimistic that the world's demand for advanced chips is strong, and they may make acquisitions. Although Broadcom's acquisition of VMVare is facing many obstacles (EU opposition), it has become a technology giant worth 250 billion US dollars through a series of bold acquisitions. It has publicly stated that it will still consider semiconductor acquisitions, saying the acquisition is a “key part of the strategy.”
As can be seen, even in a downturn in the industry, mergers and acquisitions of semiconductor companies have not abated at all. There are a few possible reasons for this:
First, in the industry's downturn, market demand declined, leading to oversupply and increased price competition. In order to survive and maintain a competitive advantage in a fiercely competitive environment, semiconductor companies tend to consolidate market share and resources through mergers and acquisitions to reduce the number of competitors.
Second, the downturn cycle may cause companies in the industry to face pressure to reduce costs and improve efficiency. Through mergers and acquisitions, enterprises can obtain companies with advanced technology and innovation capabilities. Enterprises can achieve economies of scale, consolidate overlapping businesses and resources, and reduce redundancy and duplication, thereby reducing costs and improving efficiency.
3. In the semiconductor industry, technological innovation is the key to sustainable development. In a downward cycle, some enterprises may not be able to invest and promote research and development of new technologies alone, and through mergers and acquisitions, they can obtain companies with stronger technology and R&D capabilities to improve their technological level and ability to innovate.
4. Expand product portfolio and market share through mergers and acquisitions to find new growth opportunities. By acquiring companies with complementary product lines, it is possible to expand the product line and enter new market segments, thereby increasing revenue sources in times of market downturn.
Finally, it is worth mentioning that domestic semiconductor manufacturers joining the wave of acquisitions are not only an important measure to promote industrial upgrading and technological progress, but also a key path to achieving autonomy and control. Looking at the growth paths of global analog chip giants such as Texas Instruments and ADI, they have all successfully expanded their product lines and market share through merger and acquisition strategies. The same is true in the field of EDA. The current number of domestic mergers and acquisitions in these fields is a good sign. What is reflected behind domestic mergers, acquisitions and investments in the semiconductor field in recent years is the maturity and development of the entire domestic semiconductor industry. Domestic semiconductor companies are expected to play a greater role on the global stage.
Editor/Somer