Who will be the next target of semiconductor mergers and acquisitions?

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Recently, chip manufacturers have been involved in a wave of mergers and acquisitions. Microchip (MCHP-US), a giant in the field of control components, announced last Thursday (1st) that it would acquire chip supplier Microsemi for US$8.35 billion, or US$68.78 per share.

In addition to the acquisition of Microsonic, Microchip has recently acquired Atmel, Analog Devices acquired Linear Tech, NXP acquired Freescale, and Infineon also acquired Rectifier. Qualcomm is also expected to acquire NXP for $44 billion.

Recent chip mergers and acquisitions/Photo: TheStreet

However, will the semiconductor consolidation trend continue?

TheStreet analyst Eric Jhonsa believes that Maxim, an analog supplier with a market value of $13.6 billion, is expected to be acquired by Japan's Renesas in the near future, although Renesas strongly denies it. Although Maxim's enterprise value (including debt) is 19 times free cash flow, there is still room for the acquirer to make cost cuts and product line integration.

A microcontroller unit (MCU) is a microcomputer that includes memory, I/O, and computing elements for embedded applications. It is smaller than a system on a chip (SOC).

In addition, Cypress (CY-US), a MCU supplier with a market value of US$5.8 billion, has become an important M&A target due to its position in the industrial and automotive industries. Although its slower-growing SRAM and NOR flash business groups are less attractive, its chip product lines for WiFi, Bluetooth and IoT applications are still quite attractive.

The report pointed out that IDT, which is worth $4.1 billion and supplies wireless charging components to Samsung and other Android OEMs, and its own wider product line is also one of the acquisition targets. Semtech, an analog supplier with small enterprises and high profits, is also a suitable acquisition target for IoT, RF communications, and circuit protection.

Other well-known MCU manufacturers include STMicro (STM-US) and Taiwan's Holtek and Nuvoton.

Although semiconductor mergers and acquisitions have entered a period of slowdown in the past two years, from the performance at the beginning of this year, semiconductor mergers and acquisitions have shown signs of picking up again. From the market perspective, excellent targets include the following companies:

First is Silicon Labs; if you pay attention to the IoT product market, you will find that Silicon Labs is a relatively independent company with a rich IoT product line, which is very rare in the current semiconductor market.

IC Insights also believes that Silicon Labs is a company with great acquisition potential. In the past 10 years, it has only lost a quarter of its money (only $2 million in the first quarter of 2011). At the same time, its IoT product line is very broad, including wireless Mesh solutions (such as Zigbee and Thread), as well as low-power 32-bit ARM microprocessors, sensors and other products.

其实，Silicon Labs在物联网市场上的并购也是一个典型，在2012年，他们收购了Ember，扩充了Zigbee产品线；在2013年，他们收购了Energy Micro，一个以极具能源效率MCU著称的公司；在2015年。他们就买下了无线模组供应商Bluegiga。

However, Silicon Labs' strength is not in hardware. Its most powerful weapon is its software development kit.

Like Broadcom's IoT team (acquired by Cypress last year), Silicon Labs also provides RAIL tools, as well as a wireless networking software stack (called Connect) designed specifically for private applications, which is key to IoT product design.

But there is no doubt that Silicon Labs will not be cheap.

Other potential acquisition targets include Skyworks, Macom and Qorvo, analysts said. As analog companies, their mobile products such as RF and power management are attractive sources, analysts added.

Analysts also pointed out that the above companies all have their own wafer fabs. Although future buyers can use these wafer fabs for production and regard them as an important part of their assets, from today's market perspective, these wafer fabs are likely to become a burden for buyers.

In addition, sensor supplier InvenSense, analog mixed signal supplier MaxLinear, and power tube chip manufacturer PI are all potential acquisition targets.

The above companies are able to provide highly advantageous products for portable embedded devices. At the same time, they can also provide the wireless connection products required in the Internet of Things and central systems. In addition, they provide related products such as the Internet of Things, cloud computing, automotive electronics and energy management, which makes them the darlings of the market.

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