Title: 2014 to 2016: The Most Dynamic Years in the Semiconductor Industry in History
Date: Wednesday, May 10, 2017
Time: 02:00 PM Eastern Daylight Time
Duration: 1 hour
2014 to 2016 will without a doubt be remembered as the years with the most consolidation in the history of the Semiconductor industry. Starting in 2014 with announcements such as the acquisition of Hittite Microwave by Analog Devices for $2.45 Billion, 2015 saw the largest semiconductor acquisitions and mergers in history with the $37 Billion acquisition of Broadcom by Avago, the $40 Billion merger of NXP and Freescale Semiconductors or the $16.7 Billion acquisition of Altera by Intel to name a few. The trend continues into 2016 as Analog Devices announced the acquisition of Linear Technology for $14.8 Billion and Qualcomm acquired NXP for $47 Billion, the largest financial acquisition in the history of the Semiconductor business. The number of companies involved and the financial scale is unprecedented.
Faced with low growth projections in the Semiconductor industry, what appears to be driving all this acquisition and merger activity are cash rich semiconductor companies coupled with low borrowing costs, looking toward acquisitive growth versus organic growth to extend their strong performance and keep stock prices and investor value on an upward trend. Many semiconductor companies are also looking to improve their product portfolio by offering a more complete solution to customers with more integrated systems. Some companies look to acquisitions to create more steady revenue year around with less seasonal spikes.
Finally, semiconductor companies are also looking to improve margin and/or market share by buying competitors or selling off less profitable business lines. All this acquisition, merger and product line sales creates risk and complexity for companies as they struggle to understand the supply chain availability of electronic parts they depend on to manufacturer their products. Additionally, this creates significant changes the manufacturing landscape as top manufacturers have seen tremendous revenue growth and market share has steadily increased for the top five manufacturers of specific device types.
Director, Parts Content
IHS Markit Techology, Media and Telecom