Dialog to acquire Creative Chips to expand its industrial IoT product line

Dialog Semiconductor plc, a leading provider of highly integrated power management, charging, AC/DC power conversion, Wi-Fi and Bluetooth low energy technologies, has announced that it has signed a definitive agreement to acquire Creative Chips GmbH, a leading supplier of integrated circuits (ICs) to the Industrial Internet of Things market.

Creative Chips is a fabless semiconductor company with a growing IC business, providing a broad portfolio of industrial Ethernet and other mixed-signal products to top manufacturers of industrial and building automation systems. Headquartered in Bingen, Germany, near Frankfurt, it has a design center in Dresden. Its technology is optimized for efficiently connecting a large number of IIoT sensors to industrial networks. On top of its custom IC business, Creative Chips is also developing a range of highly complementary standard IO-Link IC products to enable broader connectivity in the Industrial 4.0 revolution.

The new acquisition is a strategic move for Dialog to become an industrial IoT supplier, providing an opportunity to seize the important growth potential of the industrial IoT market. It also brings Dialog a wealth of core IC products and a wide range of analog, digital and RF related technologies. The acquisition will also bring Dialog a team of engineers with rich experience and unique skills, which, combined with Dialog's global engineers, marketing and sales teams, will help accelerate Dialog's global IC sales.

Both companies have a fabless semiconductor business model, focusing primarily on mixed-signal products and technologies. With Dialog's global scale, operations, product development and extensive IC technology resources, the combined companies will be well positioned to quickly capture IIoT market opportunities.

"The acquisition of Creative Chips is a great addition to Dialog, enabling us to gain a significant presence in the Industrial IoT market and is highly complementary to Dialog's existing mixed-signal business," said Jalal Bagherli, CEO of Dialog Semiconductor. "The addition of Creative Chips and its experienced and talented engineering team will help Dialog further diversify its product revenue, customer base and end markets, strengthening our automotive product line and expanding our presence in the industrial space. We look forward to welcoming the entire Creative Chips team to Dialog."

With the addition of Creative Chips, Dialog has gained a series of top industrial customers, and these trusting customer relationships have been established for nearly 20 years. This will expand the global sales scope of Dialog's existing wireless low-power connectivity products, configurable mixed-signal ICs (CMICs) and power management ICs, and lay a key strategic foundation for Dialog to achieve greater goals in the Industrial 4.0 market.

Creative Chips is expected to generate revenue of approximately $20 million in 2019 and grow at an annual rate of more than 25% in the next few years. Dialog will pay $80 million in cash for the acquisition, which will come from Dialog's balance sheet. In addition, based on revenue targets for 2020 and 2021, Dialog will pay up to an additional $23 million, depending on circumstances.

The acquisition is expected to close in the fourth quarter of 2019.