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Top 5 semiconductor M&As of 2015

Posted: 14 Dec 2015 ?? ?Print Version ?Bookmark and Share

Keywords:M&As? mergers? acquisitions? synergy? consolidation?

The year 2015 saw some of the biggest and, probably, the unlikeliest mergers and acquisitions in the semiconductor industry. Pundits say this trend is a way for companies to operate in a business model that can sustain profitability.

Recently, the spate of synergies has breached the $100-million mark after Microsemi outbid Skyworks for PMC-Sierra. The wave of consolidation that has run rampant for more than a year has reached new heights as buyers scramble to land a shrinking number of potential acquisition targets.

For some, though, the integration is believed to be part of a changing landscape. The nascent Internet of Things is posing both as a challenge and an opportunity for semiconductor companies. One way for them to take a big slice of this billion-dollar pie is to expand their capabilities, and the fastest way to do so is through M&As.

EE Times Asia reviewed the M&A deals that were either announced or completed in 2015, and came up with the top five synergies in terms of dollar value.

5. Cypress-Spansion

In March, Cypress Semiconductor and Spansion have finalised their merger in an all-stock, tax-free transaction valued at about $5 billion. The merger is expected to achieve more than $135 million in cost synergies on an annulaised basis within three years and to be accretive to non-GAAP earnings withing the first full year after the transaction closes.

"We closed this merger even more quickly than originally anticipated, accelerating our strategic and financial roadmap," said Cypress president and CEO T.J. Rodgers. "From day one, the new Cypress will capitalise on its expanded product portfolio and leadership positions in embedded processing and specialised memories to significantly extend its penetration of global markets such as automotive, industrial, consumer, wearable electronics and the Internet of Things."

"The new Cypress will be the No. 3 chip supplier worldwide of memories and MCUs to this business. No. 1 in SRAMs, No. 1 in NOR flash and No. 3 overall."

4. NXP-Freescale

The new NXP, created through a merger with Freescale Semiconductor for $10 billion, officially began on Dec. 7.

"We are in a historic period of M&A for the entire semiconductor industry," said Rob Lineback, a senior analyst at IC Insights. "The combination of NXP-Freescale should increase competition in a number of semiconductor sensor market categories, including acceleration and yaw segments. Price erosion in acceleration/gyroscope sensors has resulted in a decline in dollar-volume sales for this once booming MEMS-based category. Companies participating in sensors should expect more competition from NXP in the near-term."

The deal would make the two companies the world's ninth largest chipmaker. It would leapfrog competitors STMicroelectronics and Renesas at $7 billion each and approach Texas Instruments at $12 billion, according to IC Insights.

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