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After an historic surge in semiconductor merger and acquisition agreements in 2015, the torrid pace of transactions has eased (until recently), but 2016 is already the second-largest year ever for chip industry M&A announcements, according to IC Insights.
Three major deals were struck in the third quarter of 2016 that have a combined total value of US$51.0 billion, said IC Insights. As of the middle of September, announced semiconductor acquisition agreements in 2016 have a combined value of US$55.3 billion compared to the all-time high of US$103.8 billion reached in 2015. Through the first three quarters of 2015, semiconductor acquisition pacts had a combined value of about US$79.1 billion, IC Insights indicated.
In many ways, 2016 has become a sequel to the M&A mania that erupted in 2015, when semiconductor acquisitions accelerated because a growing number of suppliers turned to purchase agreements to offset slower growth in major existing end-use equipment applications (such as smartphones, PCs, and tablets) and to broaden their businesses to serve huge new market potentials, including the Internet of Things (IoT), wearable electronics, and strong segments in embedded electronics, like highly-automated automotive systems. China’s goal of boosting its domestic IC industry is also driving M&A, IC Insights noted.
In the first half of 2016, it appeared the enormous wave of semiconductor acquisitions in 2015 had subsided substantially, with the value of transactions announced between January and June being just US$4.3 billion compared to US$72.6 billion in the first half of 2015, IC Insights said. However, three large acquisition agreements announced in the third quarter of 2016, including SoftBank’s purchase of ARM, Analog Devices’ intended purchase of Linear Technology, and Renesas’ potential acquisition of Intersil, have insured that 2016 will be second only to 2015 in terms of the total value of announced semiconductor M&A transactions.
A major difference between the huge wave of semiconductor acquisitions in 2015 and the nearly 20 deals being struck in 2016 is that a significant number of transactions are for parts of businesses, divisions, product lines, technologies, or certain assets of companies. 2016 has seen a surge in the agreements in which semiconductor companies are divesting or filling out product lines and technologies for newly honed strategies in the second half of the decade, IC Insights said.
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