Mergers and acquisitions seem to be becoming more and more intense in recent years.

Recently, according to businessKorea, Samsung Electronics is actively planning mergers and acquisitions and has set its sights on the automotive semiconductor industry.

Automotive semiconductors have great potential for growth. Semiconductors in a single car are worth $400 in 2018, but are expected to be worth more than $1000 by the time driverless cars become popular in 2024, according to market research firm Gartner.

This may explain the main reason for entering a new round of integration in recent years: at present, the global semiconductor industry is entering an inflection point of new technologies and demand.

From 2015 to 2020

Every time there are frequent mergers and acquisitions in the semiconductor sector, there are always traces to follow. If you don't talk about it far away, just say 2015.

According to the data, the scale of IC mergers and acquisitions in 2015 exceeded the total of the previous seven years. In this year's wave of mergers and acquisitions, on Mae acquired Fairchild (Xiantong Semiconductor) for $2.4 billion, becoming the second largest power semiconductor company in the world; NXP acquired Freescale for $11.8 billion, establishing NXP's leading position in the field of automotive semiconductors; Intel Corp spent $16.7 billion to acquire Altera, completing the plate in FPGA chips and opening the door to AI computing. The biggest deal of the year was Anhuagao's $37 billion acquisition of Broadcom Ltd and the establishment of the new Broadcom Ltd.

Through the figure below, we can also find that in the first seven years, the situation of mergers and acquisitions in the semiconductor industry showed a large number but a small state. By 2013, the funding of private semiconductor companies had almost dried up, with the exception of a few leading companies. So the winner takes all, the big Evergrande, after 2013, large-scale acquisitions began to increase, until 2015, reached the peak.

2015 is a very special year, or a watershed.

Prior to 2015 (inclusive), semiconductor acquisitions may be in response to the challenges of slowing revenue growth and rising costs, actively seeking mergers and acquisitions to capture larger market share, optimize product mix and reduce operating costs. But after 2015, the technology industry began to change. 5G communications brought the Internet of things, the Internet of vehicles, and the rise of artificial intelligence technology to make the IC industry show a new trend.

For example, whether Softbank Corp. announced the acquisition of ARM layout Internet of things for $32 billion in 2016, Intel Corp won the car advanced self-driving chip company Mobileye for $15.3 billion in 2017 to enter the automotive field, or NVIDIA Corp spent $6.9 billion to buy Mellanox in 2019, relying on the latter's advantage in hardware communications to complete NVIDIA Corp's turnaround in the data center and HPC business.

There are signs that the main purpose of these mergers and acquisitions is no longer to play economies of scale or value immediate revenue, but to build future competitiveness in areas such as the Internet of things, autopilot, artificial intelligence and so on. As a result, although there are no particularly large mergers and acquisitions from 2017 to 2019, the giants are also laying out closely for future business growth.

By 2020, the wave of mergers and acquisitions in IC industry has reached a new peak.

Since July 2020, within a short period of four or five months, five mergers and acquisitions launched by several chip giants around the world have exceeded the scale of mergers and acquisitions in 2015.

In July, American analog chip giant ADI announced that it would buy Maxim for $21 billion in stock; in September, Nvidia announced that it would buy ARM; for $40 billion and announced more big mergers and acquisitions in October. Intel Corp first announced the sale of his NAND flash memory business and 300mm fab in China to South Korea's SK Hynix for US $9 billion. AMD announced the purchase of programmable logic leader Xilinx for about $35 billion in stock. Also at the end of October, Marvell announced that it would buy Inphi, a high-speed interconnection and mixed-signal IC provider in Silicon Valley, for $10 billion in stock and cash.

These big mergers and acquisitions let us see the ambition of the "second", such as Yadno's acquisition of Mexin intended to challenge TI's position in the simulation field, and AMD's acquisition of Cyrins is to get its hands on the data center share controlled by Intel Corp.

Second, the acquisition giants are trying to build diversified product portfolios, targeting new growth points in the industries of high-performance computing, edge computing and data centers.

Finally, the impact of the epidemic, the increase in demand for home life and office has brought about a surge in 5G networks, smart devices, and data center business, and the momentum of business innovation and growth of giant enterprises themselves has come to an end. The growth model of mergers and acquisitions of innovative technology companies and subdivision of track giants has come.

This year, whether Samsung is going to enter automotive semiconductors through acquisitions, or Qualcomm Inc Technology will buy NUVIA for about $1.4 billion to meet 5G demand, they all seem to show the same thing, not much different from the overall trend in 2020.

So we can also speculate boldly, who will be the next semiconductor giant to be acquired?

The next acquirer

The first thing to follow is Samsung's acquisition plan mentioned above. NXP of the Netherlands, Texas Instruments Inc of the United States and Renesas of Japan are becoming attractive merger targets for Samsung Electronics.

According to related reports, investment banking insiders said: "Samsung Electronics has conducted due diligence on NXP and TI in 2019." Previously, there have been rumors that Samsung is considering buying NXP.

Enzhipu

NXP acquired Freescale in 2015 for $11.2 billion, making it the world's largest supplier of automotive semiconductors. After the completion of the acquisition, the two have a total market capitalization of more than $40 billion, and NXP rose from 15th to 7th in the global semiconductor revenue rankings in the same year.

It had a sale plan earlier and failed after contacting Qualcomm Inc in 2016. After the collapse of the acquisition plan, NXP announced that it would reorganize the management team to continue to promote the company's business and development strategy.

According to NXP's website, in the automotive business, its products cover MCU and MPU, in-vehicle network, media and audio processing, smart power drivers, energy and power management, sensors, system basic chips, driver-assisted transceivers, automotive safety, and so on.

NXP has excellent technical capabilities in vehicle application processors (AP) and infotainment and is expected to have significant synergies with Samsung Electronics subsidiary Harman. This has always been the reason why Samsung wants to buy NXP.

TI

The second is TI, according to the observation of the semiconductor industry, the layout of TI in the automotive field has been more than 30 years, it has 100000 components, including nearly 2000 automotive-grade products. At the same time, in terms of product layout, Texas Instruments Inc laid out five major aspects in the field of automotive semiconductors, including advanced driving assistance system, passive safety system, body electronic devices and lighting, infotainment system and cluster system, HEV/EV and power system. In addition, TI has also made new progress in the third generation semiconductors.

Most crucially, TI is the world leader in analog semiconductors, mainly producing high-voltage power semiconductors, which is also a key component of electric vehicles, so it is only natural that Samsung wants to buy TI. However, it is not easy to acquire TI. Judging from the latest market capitalization, TI's current market capitalization is nearly $160 billion.

If Samsung wants to buy TI, it may have indigestion. However, based on Samsung's total cash holdings of about $104 billion at the end of the third quarter of 2020, it is not impossible to acquire TI if you add in stock swaps and other ways.

Renesas

Then there is Renesa, the leading manufacturer of microcontroller units (MCU), which accounts for the largest share of the automotive semiconductor market (30 per cent). Renesas has 31 per cent of the global MCU market, neck and neck with NXP. The company also acquired semiconductor design company IDT in 2018, boosting its capabilities in self-driving semiconductors.

However, it is worth noting that there will be a lot of resistance to Samsung's acquisition of Renesa. recently, relations between Japan and South Korea have frozen sharply, and the two sides have taken mutual countermeasures. At the same time, there are some differences in corporate culture between Japan and South Korea, which must be considered.

Moreover, Renesas's recent acquisition of Dialog, and their development over the years, also make it clear that their chances of selling are extremely low.

Silicon Labs

The Internet of things is still one of the hot spots this year. In the Internet of things market, Silicon Labs is a relatively independent company with a rich product line of the Internet of things, which is very rare for the current semiconductor market.

IC Insights also sees Silicon Labs as a potential acquisition company, with a loss of only $2 million in the first quarter of 11 (compared with a loss of $2 million in the first quarter of 11) and a broad product line of the Internet of things, including wireless Mesh solutions such as Zigbee and Thread, as well as low-power 32bit ARM microprocessors, sensors and other products.

However, the strength of Silicon Labs is not in the hardware, its most lethal weapon is its own software development kit.

Silicon Labs provides RAIL tools as well as a wireless network software stack (called Connect), which is specially designed for private applications, which is the key to the product design of the Internet of things.

But there is no doubt that Silicon Labs will not be very cheap. The latest figures show that his market capitalization is $6.183 billion, and his huge market valuation is the biggest obstacle for buyers.

Microchip

Microchip is the world's leading provider of integrated single-chip, analog and flash proprietary solutions, providing low-risk product development, lower total system costs and faster time to market for thousands of consumer products worldwide.

In April 2016, Microchip acquired Atmel for $3.56 billion. The fourth, which is equivalent to the market share of MCU microcontroller at that time, acquired the sixth. The merged Microchip became the third in the market, joining Renesas Semiconductor and NXP Semiconductor in the Romance of the MCU three Kingdoms. The latter had just acquired Freescale at that time.

In the previous article, we also mentioned that the ambition of the "second" in the market seems to be getting stronger and stronger. In the MCU market, Microchip is undoubtedly a good acquirer as well as a potential acquirer.

Marvell

Founded in 1995, Marvell ranked among the top five semiconductors in the world at its peak. But after Qualcomm Inc, MediaTek and Spreadtrum entered on a large scale, Marvell retreated one after another. After that, Marvell adjusted itself, and from fiscal year 2017, Marvell directly cut off the "mobile and wireless business" and paid more attention to the "network" business. And successively acquired Cavium, Avera, and began to transform to the field of data infrastructure. After three years of efforts, in 2020, Marvell announced that it had completed its transition to data infrastructure.

One of the most interesting things about Marvell is that it is dedicated to ARM server chips. This is also the reason for Marvell's acquisition of Cavium. Cavium previously has more than 15 years of technology accumulation in high-performance computing multicore CPU and has rich experience in the field of embedded servers based on Arm architecture.

To sum up, Amazon.Com Inc, Apple Inc, Microsoft Corp and Alphabet Inc-CL C have developed ARM architecture server chips in the five major American science and technology enterprises. For those manufacturers who want to get rid of Intel Corp server chips or Intel Corp's old competitors, winning Marvell seems to be a good choice.

Nordic

Nordic is the leader in the BLE field, with a market share of about 40% in the BLE field. Specialize in developing wireless technologies that provide technical support for the Internet of things. The company's award-winning Bluetooth LE solution has made it a market leader, in addition to ANT+, Bluetooth mesh, Thread and Zigbee products. Nordic's latest technologies NB-IoT and LTE-M use cellular infrastructure to extend the Internet of things.

Nordic is the only remaining semiconductor company headquartered in Europe. While startups such as Ember and Dust Networks have long been snapped up by Silicon Labs and Linear Technology, Nordic has become more and more popular. It has the world's most powerful low-power Bluetooth stack development team, which designs, tests and validates all of the company's "SoftDevice" (Nordic low-power Bluetooth and ANT stack names) within the company.

At the same time, Nordic is also accelerating its industrial layout, including investing in networking protocols: horizontal expansion of 2.4G product lines; enriching 2.4G product lines, mainly to make up 2.4G target chips in high, middle and low three segments of the market, etc.; layout of LTE-M and NB-IoT long-distance network access to complete home MESH network and LAN convergence to meet the end-to-cloud layout of the Internet of things Have a clearer product strategy, complete ecological construction, service ecological chain enterprises, provide Internet ecological chain company BLE transport protocol and so on.

For the giants, Nordic is undoubtedly popular, has a strong strength in the field of segmentation, and its inclusion in the bag will undoubtedly greatly enhance the strength of acquirers in the field of BLE and even the Internet of things.

Summary

With the maturity of the market served by chip suppliers, the slow growth of semiconductors is an undeniable fact. Large global enterprises seem to be moving towards the direction of group development, and exploring new technological directions and fields has also become the main goal of their layout in recent years.

Companies that have features in their respective fields or can provide new technologies will be popular in the eyes of these giants. And who will be the next acquirer? We'll see.