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Analysts weigh in on TI-National Semi deal

Posted: 08 Apr 2011 ?? ?Print Version ?Bookmark and Share

Keywords:TI-National Semi deal? merger? acquisitions? analysis?

Texas Instruments Inc. and National Semiconductor Corp. have announced on April 4 that the companies have signed in a definitive merger agreement for TI to acquire National for $6.5 billion in cash. Read more about the related story here.

The news has created much buzz on the industry and here's what analysts are saying about the deal:

For Susie Inouye, principal analyst with Databeans, the TI's proposed acquisition of National is very significant for the analog industry. "Combined, these companies are in the top five for each of the general purpose analog categories. The number one supplier of general purpose analog just announced they are acquiring the third largest supplier of general purpose analog. After regulatory bodies and share holder approval, this will give TI a market share of around 29 percent of the general purpose analog market and 18 percent share of total analog (with ASSPs like RF included). Prior to the acquisition, TI's share was 21 percent and 15 percent respectively. The major gain is in general purpose analog. The massive sales force at TI combined with National's resources in sales will be hard to compete with," she said.

"There are a few items that I'd call out specifically in showing added value to the number one analog company: First is the addition of the Simple Switcher line, which will add significant value to TI's power portfolio. National's Web Bench is the best online design tool in the industry and leveraging this, along with sales and FAEs will definitely benefit. National's LED driver products is another. TI's recently added 300mm capacity along with this new acquisition is reinforcing a very strong position in the analog market. We are likely to see TI move up the total semiconductor supplier ranking into the number 3 spot just below microprocessor giant, Intel, memory giant, Samsung. It's indicative that the number three semiconductor supplier could be an analog company given the importance of analog circuits in our increasingly "digital world," Inouye said.

Market research house IHS iSuppli, said: ''Based on final results from the year 2010, the National acquisition would make TI the world's third largest semiconductor company. This would allow TI to rise one place in the rankings from fourth place, supplanting Japan's Toshiba Corp.

Within the analog segment, the acquisition will 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 a share of 18.1 percent. National was the third largest supplier, with $758 million in revenue and 15.2 percent in revenue. With the acquisition, TI's voltage regulator revenue would amount to $2.4 billion in 2010, giving it a 26.5 percent share of the market.

The acquisition will also bolster TI's dominant position in another segment of the analog market: analog/comparator integrated circuits. In 2010, TI earned $932 million in analog/comparator revenue, giving it a 24.6 percent share of the market."

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