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TI buys National Semiconductor

Posted: 06 Apr 2011 ?? ?Print Version ?Bookmark and Share

Keywords:acquisition? analog? IC? market?

The combined company also will benefit from National's manufacturing operations, located in Maine, Scotland and Malaysia, which TI will continue to operate. Each site has additional capacity to increase production. National's headquarters will remain in Santa Clara, California.

Under terms of the agreement, National stockholders will receive $25 in cash for each share of National common stock they hold at the time of closing. TI expects to fund the transaction with a combination of existing cash balances and debt. The acquisition is subject to customary closing conditions, including review by U.S. and international regulators and approval by National's shareholders. The transaction is expected to close in six to nine months.

According to Databeans, National was the fifth ranked vendor in 2009, but slipped to No. 7 as some of its competitors grew faster than National in the rebound year of 2010.

Greg Lowe, senior vice president of TI's analog business unit, said TI had done intensive analysis on National's product line and concluded that the two companies' product lines are generally complementary. In some areas where the two may appear on the surface to compete head-to-head, Lowe said, "if you peel back the onion" it becomes clear that the products are used in different applications.

Lowe gave as an example switch mode power supplies. TI offers its Swift switchers with integrated FETs, which are mostly used in low-voltage applications, while National offers its Simple Switchers, mostly used in high-voltage applications.

"We've analyzed this across a number of product areas, and when you peel the onion one single layer, the portfolios are complementary," Lowe said.

"Our two companies complement each other very well," said Don Macleod, National's CEO. "TI has much greater scale in the marketplace, with its larger portfolio of products and its large global sales force. This provides a platform to enhance National's strong and highly profitable analog capability, power management in particular, leading to meaningful growth."

According to Ohr, TI was looking into acquiring several companies in the $100 million to $300 million annual revenue range during the tail end of the most recent downturn.

TI ranked No. 4 in the world in overall semiconductor sales in 2010 with revenue of $11.9 billion. The addition of National's revenue would have made TI the No. 3 chip vendor in 2010, ahead of Toshiba and trailing only Intel Corp. and Samsung Electronics Co. Ltd, according to Gartner. National had revenue of $1.42 billion in its fiscal 2010.

According to market research firm IHS iSuppli, the acquisition would particularly bolster TI's lead in the market for voltage regulators. TI was the leading voltage regulator supplier in 2010, with $1.7 billion in revenue and market share of 18.1 percent, while National was the third largest supplier with market share of 15.2 percent, according to IHS. The combination would have given TI $.24 billion in regulator revenue for 2010, good for 26.5 percent of the market, IHS said.

The global voltage regulator market expanded by 36.3 percent to reach $9.1 billion in 2010, better than the overall IC growth of 32 percent, according to IHS. In the past nine years,, the global semiconductor market has expanded by 93.1 percent while the voltage regulator segment has expanded by 169.4 percent, IHS said.

According to IHS, the combined TI and National would have had analog IC revenue of $1.3 billion and 24.6 percent share of the analog market in 2010.

- Dylan McGrath
??EE Times

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