Taiwan's design houses continue to attract buyouts

The times are improving for acquisitions of Taiwanese fabless design houses. Their technology is improving, while valuations remain reasonable—at least compared to U.S. companies.

The M&A scene in the country is beginning to percolate. In the past year or so, a handful of U.S. companies have come knocking, using acquisitions to round out their technology portfolios, or seek closer ties to the region's ODMs.

There are a handful of other deals in the early stages, too, executives said, and inquiries are on the rise. Generally, a few trends are converging to make some companies attractive targets. "The technology of Taiwanese companies is catching up to U.S. companies, so unless it is very advanced technology, you can find the people to implement it in Taiwan. To do it in the U.S. would be much more expensive," said Michael Lu, president of Airoha Technology, a private fabless firm making RF ICs that has been approached in the past by suitors.

Late last month, Atheros Communications Inc. picked up its second company in Taiwan in less than a year. Lacking Gigabit Ethernet technology for the 802.11n market, the company turned to Attansic Technology Co., a designer of Ethernet chips and subsidiary of Asustek Computer, one of Taiwan's largest ODMs. It picked up the company for $46.5 million in cash and $25 million in Atheros common stock.

Craig Barratt, CEO of Atheros, said his company looked to Taiwan because over the last few years he has seen a significant increase in the design, R&D and engineering capability of Asian companies. "Historically, people would have used the stereotype that companies there are primarily just focused on production issues—mainly product engineering and so on—but there has really been tremendous growth in companies doing pretty impressive R&D, creative engineering and product development," he said.

- Mike Clendenin
EE Times