Tsunami of M&A Deals Underway in the Semiconductor Industry in 2015
July 31, 2015 | IC InsightsEstimated reading time: 2 minutes
Marketshare expansion, Internet of Things opportunities, rising costs of R&D, and China’s aggressive new focus on the semiconductor industry all driving the recent M&A surge.
IC Insights’ new 185-page Mid-Year Update to The McClean Report, which will be released later this week, examines the recent surge of M&A activity, including China’s aggressive new programs aimed at bolstering its presence in the semiconductor industry.
It would be hard to characterize the huge wave of semiconductor mergers and acquisitions occurring in 2015 as anything but M&A mania, or even madness. In just the first half of 2015 alone, announced semiconductor acquisition agreements had a combined total value of $72.6 billion (Figure 1), which is nearly 6x the annual average for M&A deals struck during the five previous years (2010-2014).
Three enormous acquisition agreements in 1H15 have already catapulted 2015 into the M&A record books. First, NXP announced an agreement in March to buy Freescale for $11.8 billion in cash and stock. In late May, Avago announced a deal to acquire Broadcom for about $37 billion in cash and stock, and then four days later (on June 1), Intel reported it had struck an agreement to buy Altera for $16.7 billion in cash. Avago’s astonishing deal to buy Broadcom is by far the largest acquisition agreement ever reached in the IC industry.
In many ways, 2015 has become a perfect storm for acquisitions, mergers, and consolidation among major suppliers, which are seeing sales slow in their existing market segments and need to broaden their businesses to stay in favor with investors. Rising costs of product development and advanced technologies are also driving the need to become bigger and grow sales at higher rates in the second half of this decade. The emergence of the huge market potential for the Internet of Things (IoT) is causing major IC suppliers to reset their strategies and quickly fill in missing pieces in their product portfolios. China’s ambitious goal to become self-sufficient in semiconductors and reduce imports of ICs from foreign suppliers has also launched a number of acquisitions by Chinese companies and investment groups.
IC Insights believes that the increasing number of mergers and acquisitions, leading to fewer major IC manufacturers and suppliers, is one of major changes in the supply base that illustrate the maturing of the industry. In addition to the monstrous M&A wave currently taking place, trends such as the lack of any new entry points for startup IC manufacturers, the strong movement to the fab-lite business model, and the declining capex as a percent of sales ratio, all promise to dramatically reshape the semiconductor industry landscape over the next five years.
Report Details: The 2015 McClean Report
Further details on the latest semiconductor industry trends are included in the 185-page Mid-Year Update to The McClean Report—A Complete Analysis and Forecast of the Integrated Circuit Industry. A subscription to The McClean Report includes free monthly updates from March through November (including the Mid-Year Report), and free access to subscriber-only webinars throughout the year. An individual-user license to the 2015 edition of The McClean Report is priced at $3,590 and includes an Internet access password. A multi-user worldwide corporate license is available for $6,590.
Suggested Items
SMC Korea 2024 to Highlight Semiconductor Materials Trends and Innovations on Industry’s Path to $1 Trillion
04/24/2024 | SEMIWith Korea a major consumer of semiconductor materials and advanced materials a key driver of innovation on the industry’s path to $1 trillion, industry leaders and experts will gather at SMC (Strategic Materials Conference) Korea 2024 on May 29 at the Suwon Convention Center in Gyeonggi-do, South Korea to provide insights into the latest materials developments and trends. Registration is open.
Elevating PCB Design Engineering With IPC Programs
04/24/2024 | Cory Blaylock, IPCIn a monumental stride for the electronics manufacturing industry, IPC has successfully championed the recognition of the PCB Design Engineer as an official occupation by the U.S. Department of Labor (DOL). This pivotal achievement not only underscores the critical role of PCB design engineers within the technology landscape, but also marks the beginning of a transformative journey toward nurturing a robust, skilled workforce ready to propel our industry into the future.
Real Time with... IPC APEX EXPO 2024: Going Vertical: SCHMID's Advanced Solutions for Printed Circuit Boards
04/24/2024 | Real Time with...IPC APEX EXPOEditor Marcy LaRont chats with Bob Ferguson, the president of SCHMID, about advanced solutions for PCBs and the equipment they are highlighting at this year's show. He delves into vertical no-touch handling systems and the prospect of achieving sub-10-micron lines. Inspired by SCHMID's technology, Bob expresses excitement about where the industry is today.
Big Win for Defense Production Act Budget Allocation in FY24 Budget
04/23/2024 | I-Connect007 Editorial TeamOne year ago, President Biden issued a determination that chips and packaging are critical for national security. Since that time, much work has been done to continue the conversation in Washington, elevating the importance of the entire chips value chain, and including printed circuit boards and substrates, without which chips cannot operate.
Zentech’s Board of Directors Announces the Return of Matt Turpin as President and CEO
04/22/2024 | Zentech ManufacturingTurpin draws upon over 35 years of experience in the electronics industry and has an 18-year history with Zentech. He previously served as President and CEO from 2006 to 2019 after which time he has remained active in the EMS industry as an advisor to Zentech and other industry organizations.