recent investments & maneuvers
Semiconductor companies are struggling to own more of the tech stack and expand into software, but strict regulations and hefty price tags are standing in the way.
Semiconductor companies have always been grounded in the world of physical hardware, machine language and microcode. Although, over the last several years more semiconductor companies have made many attempts to increase their software capabilities, attracted by the potential for high profits and higher value.
But over and over again, this has proven to be a challenging path for silicon players. If the business model challenges don’t kill you, the regulatory hoops semiconductor acquisitions are subject to, both in the US, China and around the world, likely will. At the same time, the value of semiconductor M&A agreements has been on the rise from an average of less than $13 billion per deal prior to 2015 to more than $68.5 billion today. It seems clear that semiconductor companies will continue to look for ways to load balance their portfolios.
Broadcom’s recent move to acquire VMware is the company’s third major software acquisition: It bought CA Technologies for $18.9 billion in 2018 and Symantec’s enterprise security business in 2019 for $10.7 billion. The Broadcom-VMWare deal is a bold move to own more of the tech stack in a conservative industry known more for consolidation. Is the $69 billion price tag worth it? Dell certainly didn’t think so; does Broadcom know something that Dell missed?
SOFTWARE AQUISITIONS, BIG & SMALL
Renesas: to acquire Reality AI
Semiconductor solution provider Renesas Electronics Corporation announced plans to acquire AI and non-visual sensing company Reality AI in an all cash transaction. Though Reality AI is a small team (an estimated staff of eight), the acquisition helps position Renesas in Industrial Internet of Things and automotive solutions.
Broadcom: to acquire VMware for $69 billion
Broadcom Inc., a leading semiconductor company, announced plans to acquire cloud and virtualization service provider VMware Inc. for $61 billion. Broadcom will also take on $8 billion of VMware debt. Following the acquisition, Broadcom Software Group will rebrand as VMware. Founded in 1998, the company was first acquired by EMC in late 2003 for $625 million. Dell acquired EMC for $67 billion in 2016 and spun off VMware in late 2021.
Galaxy Semiconductor: acquired Ippon Innovation
Galaxy Semiconductor Inc. has acquired French AI company Ippon Innovation. Ippon Innovation was founded in 2007 to provide advanced statistics and AI for semiconductors and pharmaceuticals. Galaxy Semiconductor plans to commercialize Ippon Innovation’s IP and software suite, which includes predictive maintenance, anomalous product and root cause identification.
Lattice Semiconductor: acquired Mirametrix
Lattice Semiconductor Corporation has acquired AI and computer vision company Mirametrix in an all cash transaction. The small Canadian AI company was founded in 2010. The company boasts a software platform, Glance, as well as sensing technology to understand human intention through the face, eyes, gaze, etc.
SILICON CONSOLIDATIONS & ACQUISITIONS
Marvell: acquired Tanzanite Silicon Solutions
Marvell has acquired advaced Compute Express Link (CXL) technologies company Tanzanite Silicon Solutions, Inc. CXL is an industry standard for connecting processors, accelerators and memory. Marvell has made multiple investments in distributed “next generation” data centers that utilize CXL.
AMD: acquired Pensando for $1.9 billion
Chipmaker Advanced Micro Devices Inc. (AMD) has acquired edge computing and private networking processor company Pensando for $1.9 billion. This positions AMD more competively against Intel and NVIDIA who already package processer and networking tech for data center customers. Pensando was founded by former Cisco engineers. The Pensando team will join the AMD Data Center Solutions Group.
AMD: acquired Xilinx for $49 billion
Chipmaker Advanced Micro Devices Inc. (AMD) has acquired programmable chip company Xilinx for $49 billion in an all stock transaction. The deal was originally announced in October 2020 and valued at $35 billion. A raise in stock prices increased the value. The combined companies will focus on high performance and adaptive computing solutions. The acquisition represents a complementary expansion of AMD’s products, but doesn’t show a broader vertical strategy.
Intel: acquired Tower Semiconductor for $5.4 billion
Intel has acquired Israeli foundry semiconductor company Tower Semiconductors for $5.4 billion. The acquisition bolsters Intel’s end-to-end foundry business, but does not address a broader innovation strategy. Intel has been expanding its manufacturing strategy with $76.5 billion invested in new facilities in the U.S. and at least $36 billion invested in new facilities in Europe.
Renesas Electronics: acquired Dialog Semiconductor for $5.9 billion
Semiconductor solution provider Renesas Electronics Corporation acquired energy management and edge computing company Dialog Semiconductor Plc. for $5.9 billion. Renesas hopes the acquisition will help position their solutions for IoT, industrial and automotive customers.
Analog Devices: acquired Maxim Integrated for $20.8 billion
Semiconductor company Analog Devices Inc. (ADI) acquired chipmaker Maxim Integrated Products Inc. for $20.8 billion. The acquisition will help increase ADI’s share of the chip market, having merged the second and third largest analog chip companies. Leading analog chip company Texas Instruments has been expanding its automotive offering.
Nexperia: acquired Newport Wafer Fab
Chinese-owned, US-baseed semiconductor company Nexperia acquired Newport Wafer Fab (NWF) the UK’s largest semiconductor firm. Nexperia became NWF’s second largest shareholder in 2019. The acquisition gives Nexperia full ownership.
Qualcomm: acquired NUVIA for $1.4 billion
Chipmaker Qualcomm acquired silicon design company NUCVIA for approxiametely $1.4 billion. The acquisition builds on Qualcomm’s Snapdragon board and aims to improve CPU performance.
NVIDIA & SoftBank: terminated acquision of Arm for $40 billion
In September 2020, NVIDIA announced that it would acquire Arm for $40 billion. After much regulatory scrutiny, that deal is now canceled. SoftBank Group is now looking to take Arm public by March 2023 and NVIDIA will retain its 20-year Arm license. NVIDIA is a good example of a hardware company creatively focusing on enabling partners to build AI and software solutions using NVIDIA hardware. The failed acquisition might serve as a warning of the hurdles semiconductor companies might face.
Applied Materials: terminated acquision of Kokusai for $3.5 billion
Applied Materials Inc. terminated its bid for Kokusai Electric Corp. Kokusai had split off from Hitachi Kokusai Electric in June 2018. In December 2021, Applied Materials raised its offer from $2.2 billion to $3.5 billion. Ultimately they failed to get approval from Chinese regulators. Applied Materials paid a $154 million termination fee to exit the deal.
Qualcomm: terminated acquision of NXP for $44 billion
San Diego based Qualcomm agreed to pay $2 billion to terminate its acquisition of automotive and IoT chipmaker NXP after failing to get Chinese regulatory approval. Qualcomm needed Chinese approval due to NXP’s large presence in the country.
Broadcom: terminated acquisition of Qualcomm for $117 billion
Broadcom officially withdrew its bid to acquire Qualcomm Inc. for $117 billion. The acquisition was blocked by former President Trump over “national security concerns.”