In 2015 we saw $85B in semiconductor acquisition activity and in 2016 there was more than $110B. Given 2015 and 2016 were relatively flat years for the $335B semiconductor industry and 2017 looks like more of the same we should expect consolidation to continue, absolutely.
So, let’s come up with a list of companies that may fall in 2017 and circle around at the end of the year to see how we did. I will be more than happy to defend my choices in detail in the comments section.
My first three picks will focus on companies in the growth markets of data center, IoT, and automotive chips. I also look at company leadership (strong or weak, new or old) and if an activist investor is involved that’s a bonus. But first let’s look at who was acquired in 2015, 2016, and who is up for grabs in 2017 (let me know who I missed).
Acquired in 2015:
Acquired in 2016:
Who’s left? (not exhaustive, just the ones I know)
Ambarella, AMD, Analog Devices, Broadcom, Cavium, Cirrus Logic, Cypress Semi, Dialog, IDT, Inphi, Infineon, Intel, MACOM, Marvell, Maxim, MediaTek, Melexis, Mellanox, Microchip, Micron, Micronas, Microsemi, Novatech, NVIDIA, On Semi, Qorvo, Qualcomm, Realtek, Renasas, Samsung, Semtech, Silicon Labs, Silicon Motion, SK Hynix, Skyworks,Sony Semi, STMicro, Synaptics, Texas Instruments, Toshiba, Xilinx.
The company names in bold are on the SOX Semiconductor Index which is up 36% this year, a big number considering the semiconductor industry on a whole was flat in 2016. Given we are looking at another growth challenged year, here are the first three companies that I feel are best positioned for Acquisition in 2017:
According to Marvell:
Marvell first revolutionized the digital storage industry by moving information at speeds never thought possible. Today, that same breakthrough innovation remains at the heart of the company’s storage, network infrastructure, and wireless connectivity solutions. With leading intellectual property and deep system-level knowledge, Marvell’s semiconductor solutions continue to transform the enterprise, cloud, automotive, industrial, and consumer markets. To learn more, visit: www.marvell.com.
While Marvell has always been viewed as a technology centric company with very controlling management resulting in a historically high executive turnover rate, that all changed in April of 2016 when founder/CEO Sehat Sutardja and his wife Weili Dai were ousted as a result of questionable management practices. Marvell now has a new CEO, executive staff, and board members.
According to Microsemi:
Microsemi Corporation (Nasdaq: MSCC) offers a comprehensive portfolio of semiconductor and system solutions for aerospace & defense, communications, data center and industrial markets. Products include high-performance and radiation-hardened analog mixed-signal integrated circuits, FPGAs, SoCs and ASICs; power management products; timing and synchronization devices and precise time solutions, setting the world’s standard for time; voice processing devices; RF solutions; discrete components; enterprise storage and communication solutions, security technologies and scalable anti-tamper products; Ethernet solutions; Power-over-Ethernet ICs and midspans; as well as custom design capabilities and services. Microsemi is headquartered in Aliso Viejo, California and has approximately 4,800 employees globally. Learn more at www.microsemi.com.
Microsemi has been reported to be looking at sale options after takeover interest from Skyworks. Microsemi is a well-known AMS expert inside the aerospace/defense, industrial markets, and communications including connectivity chips for data centers. The FPGA business is the big swing here for M&A after the $16.7B Intel acquisition of Altera and the recent $1.3B acquisition of Lattice Logic.
According to Cypress:
Founded in 1982, Cypress is the leader in advanced embedded system solutions for the world’s most innovative automotive, industrial, home automation and appliances, consumer electronics and medical products. Cypress’s programmable systems-on-chip, general-purpose microcontrollers, analog ICs, wireless and USB-based connectivity solutions and reliable, high-performance memories help engineers design differentiated products and get them to market first. Cypress is committed to providing customers with the best support and engineering resources on the planet enabling innovators and out-of-the-box thinkers to disrupt markets and create new product categories in record time. To learn more, go to www.cypress.com.
Last year Cypress founder and CEO TJ Rodgers stepped down naming Cypress insider Hassane El-Khoury President, CEO, and a member of the Board of Directors (TJ is no longer on the BoD). In 2015 Cypress cemented itself as a world class memory provider with the $5B Spansion merger and in April 2016 Cypress acquired Broadcom’s IoT business for $550M.