The Swiftly Changing Landscape of Semiconductor Companies: 2021 Acquisitions Update

The Swiftly Changing Landscape of Semiconductor Companies: 2021 Acquisitions Update



From a higher-level market perspective, the semiconductor industry has been following some interesting trends in recent years. Specifically, a large number of mergers and acquisitions (M&A) come to fruition in the year 2021 alone, and more are on the horizon. 

 

Value of semiconductor M&A agreements.

Value of semiconductor M&A agreements. Image used courtesy of IC Insights
 

This article will cover a slew of recently completed mergers and acquisitions and address the more significant questions, like what is driving this trend and how it affects the semiconductor industry?

 

Recent Mergers & Acquisitions 

Recently, there have been three prominent M&A events:

The first noteworthy merger is Renesas’ acquisition of Dialog Semiconductor. According to representatives at Renesas, the investment benefits the company by allowing it to scale its IoT sector capabilities by leveraging Dialog’s portfolio of low-power technologies. Specifically cited are Dialog’s BLE, WiFi, and audio SoCs, which Renesas feels complement its current MCU portfolios. Beyond this, the company could benefit from an increased engineering and design scale for faster time to markets.

The second big merger of 2021 was ADI’s acquisition of Maxim Integrated. The acquisition is meant to provide Analog with increased domain expertise and capabilities, opening it up and positioning it well for various key market growth trends. Specifically, ADI believes that Maxim’s strength in the automotive and data center markets will be invaluable moving forward as it seeks to establish itself as a dominant player in both fields. 

The final merger of interest is Nexperia’s acquisition of NWF. Nexperia has been a customer of NWF for many years, and now, with the purchase, it has obtained 100% ownership of the semiconductor production facility. The fab currently has a capacity of over 35,000 200 mm wafer starts per month, including technologies from standard MOSFETs to trench IGBTs, which are a staple in Nexperia’s portfolio. Beyond increased production, Nexperia also feels that they benefit from NWF’s significantly enhanced automotive-qualified product supply capability. 

Though these companies that are on the purchasing side can stand to gain some major advantages; however, why is this shift towards consolidation happening with larger and larger companies?

 

The Consolidation Movement

With so many non-trivial acquisitions in 2021, it’s essential to ask ourselves: why is this happening? There probably is not one “right” answer, but, in general, there are a couple of things to be said. 

One explanation is that the market has become increasingly competitive since the turn of the century. In 2008, the top 10 semiconductor companies collectively controlled ~46% of the market share, while the rest of the industry controlled the other ~54%. 

Fast forward over a decade to 2020, and it seems that today, the top 10 semiconductor companies own a collective 55% of the market, with the rest of the industry controlling 45%.

 

Semiconductor company worldwide market share from 2008-2020.

Semiconductor company worldwide market share from 2008-2020. Image used courtesy of Statista

 

This shift could mean that the industry as a whole has been moving towards consolidation, with more and more market share being controlled by the big players over time. 

One setback with this shift is that it can make it increasingly difficult for smaller companies to gain a significant foothold on their own, hence leading to a need for consolidation (i.e., mergers and acquisitions). To compete in today’s market, companies often need to have a combination of breadth and depth in their product offerings, which is nearly impossible to achieve without the large scales and diversity that come with mergers. 

Overall, this movement towards consolidation could have some effects on the semiconductor industry.

 

Effects of Consolidation 

People who favor this market trend could believe that consolidation allows for better product offerings that work more cohesively. Instead of purchasing MCUs from one company, SoCs from another, and power solutions from a third, it may be beneficial if one company could provide all three solutions. In this scheme, systems design and component integration can become significantly easier since all components were designed to work together. 

On the other hand, this trend could seem a bit concerning for proponents of a free market. 

The theory is, if a select few groups own all the market share, there will be less competition in the long run leading to decreased diversity, innovation, and consumer choice. While this point-of-view may seem a little Orwellian, Moore’s Law is a law of economics driven by competition, and if that competition dwindles, then innovation may as well. 

This trend is already seeming to take shape in the lack of new companies becoming major players in the industry. Today’s narrative is that a new, innovative company will eventually be bought out and absorbed into the auspices of some larger semiconductor giant. Instead, 50 years ago, that innovative company may have grown into a semiconductor giant in its own right. 

Overall, recent years have seen an increase in consolidation in the semiconductor industry, a trend that is expected to continue in the near future. While this trend could be alarming to some and welcomed by others, only time will tell what ramifications it holds.

 

Feature image used courtesy of Analog

 


 

Interested in other acquisition news? Read more in the articles down below.

onsemi Recalibrates Its Mission Through Rebranding and a SiC Acquisition

In Its First Public Acquisition, SpaceX Snatches Up Satellite Startup Swarm

Marvell’s Data Center Strategy Behind Its $1.1B Acquisition of Innovium



For lighting, electrical, signage, and technology solutions that allow you to do more call Sverige Energy today at +4(670) 4122522.

Share on Facebook Share on twitter
Related Posts
Leave a Reply

Your email address will not be published.Required fields are marked *