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Shakeup in Analog Rankings

Shakeup in Analog Rankings
by Bill Jewell on 09-20-2016 at 4:00 pm

Last week Renesas Electronics announced an agreement to acquire Intersil Corporation for US$3.22 billion. This follows July’s announcement that Analog Devices Inc. (ADI) will acquire Linear Technology Corp. (LTC) for $14.8 billion. These deals will cause a shakeup in the analog IC market. According to IC Insights ranking of analog IC suppliers for 2015, ADI was number four, LTC was number eight and Renesas was number ten. Comparing 2015 analog rankings with 1995, 20 years ago, reveals some interesting changes. The table below shows analog rankings from 1995 from Gartner (then known as Dataquest), 2015 rankings from IC Insights, and our Semiconductor Intelligence (SC-IQ) forecast of 2016 rankings.

Only three names from the 1995 list are on the 2015 list: STMicroelectronics (ST), Texas Instruments (TI), and Analog Devices (ADI). However, several of the analog businesses from 1995 are represented in 2015 under different names through various spin-offs, acquisitions and mergers.

Philips, number two in 1995, spun off its semiconductor business as NXP Semiconductors in 2006. NXP is number seven on the 2015 list.

National Semiconductor, number three in 1995, was acquired by TI in 2011, solidifying TI’s number one ranking. In 1995 National included Fairchild Semiconductor, which was spun off in 1997. TI also bolstered its analog position with acquisitions of Silicon Systems in 1996, Unitrode and Power Trends in 1999 and Burr-Brown in 2000.

Motorola (number four in 1995) divested its semiconductor businesses as ON Semiconductor in 1999 and Freescale Semiconductor in 2003. In 2015 ON Semiconductor agreed to acquire Fairchild, with completion expected within the few months. ON’s number nine 2015 ranking does not include Fairchild. NXP acquired Freescale in December 2015 (NXP’s 2015 number seven ranking includes Freescale).

Toshiba and Sanyo are both still in the analog business, but have dropped out of the top ten.

Siemens, number nine in 1995 spun off its semiconductor business as Infineon Technologies in 1999. Infineon was number two in 2015. Some of Infineon’s growth was due to the acquisition of International Rectifier in January 2015.

NEC (number ten in 1995) combined its semiconductor business, NEC Electronics, with Renesas Technology in 2010 to form Renesas Electronics. Renesas Technology was formed in 2003 as a joint venture of the semiconductor business of Mitsubishi (number 13 in the 1995 analog rankings) and Hitachi (number 16). Renesas was number ten in 2015.

Thus only three companies in the 2015 ranking do not have ties to companies in the 1995 ranking. Skyworks Solutions was formed in 2002 with the merger of Alpha Industries and Conexant’s wireless division. Maxim Integrated was not even in the top 20 in the 1995 analog rankings, but moved up to number six in 2015 with over 10 times the revenue of 1995. Much of Maxim’s growth was driven by acquisitions including Dallas Semiconductor and Volterra and product lines from Vitesse and Zilog. LTC was number 18 in 1995 and number 8 in 2015. LTC’s growth was primarily organic, with few acquisitions.

Maxim has been mentioned as both a potential acquisition target and a potential acquirer. Bloomberg reported in January 2016 that TI and ADI each investigated an acquisition of Maxim, but each company decided the price was too high. EE Times revealed in August that Maxim was in the bidding for Intersil before Renesas closed the deal.

What will the analog rankings look like when 2016 is over? TI will certainly remain number one with over $8 billion in analog revenue. ADI will move up to number two with over $4 billion in revenue including LTC. The ADI and LTC merger will not be completed until 2017, but we have combined their revenues in 2016 for comparison. Infineon and Skyworks should be three and four, but there is a chance Skyworks could pass Infineon. Maxim and NXP should remain six and seven. ON will add over $300 million in analog revenue with the Fairchild acquisition and move up from number nine to number eight. However, ON will not pass anybody, just move up one with elimination of LTC. Renesas will add over $500 million in analog revenue with the Intersil acquisition and move up from number 10 to number 9 (Renesas and Intersil are combined for comparison in 2016 even though the deal will not be complete until 2017).

The ADI and LTC combination will open up a spot in the top 10 in 2016. That spot should be taken by MediaTek, which added about $400 million in analog revenue with the acquisition of Richtek Technology in October 2015.

Intersil: the remnants of semiconductor pioneers.

The proposed acquisition of Intersil by Renesas will lead to the further disappearance of two pioneers in the semiconductor industry. Intersil was formed in 1999 when Harris Corporation spun off its semiconductor business. Harris had previously purchased the General Electric (GE) semiconductor business in 1988. The GE semiconductor business included RCA Solid State, which GE purchased from RCA in 1986. Harris began its semiconductor operation in 1967 with the purchase of Radiation Inc. Also in 1967 the original Intersil was founded by Jean Hoerni, one of the founders of Fairchild and the inventor of the planar process. GE bought Intersil in 1981. The Intersil name was revived with the 1999 spinoff from Harris.

GE and RCA were early leaders in semiconductors. GE was one of the original licensees of the AT&T transistor patent and RCA was an early licensee. The two companies also did significant semiconductor research on their own. The history of early GE and RCA research is detailed in the excellent Transistor History website created by Mark P D Burgess.

GE and RCA were leaders in consumer electronics and primarily used many of their semiconductors internally. They also sold on the merchant market. GE was a major supplier of discrete semiconductors in the 1960s. RCA was a top ten merchant semiconductor supplier in the mid-1970s.

After the Intersil acquisition, Renesas Electronics will contain the remnants of five companies which began semiconductor research in the 1940s and 1950s: GE, RCA, NEC, Hitachi and Mitsubishi.