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How big is the impact of corporate M&A on the analog chip market?



Since 2015, there have been many mergers and acquisitions in the semiconductor industry, and there are also cases in which mergers and acquisitions have changed the pattern of a certain segment.

Compared with the two major changes in the auto chip leader in five years, although there is no shortage of mergers and acquisitions between giants in the analog chip field, the performance of this market segment appears to be very stable.

 

Judging from the latest ranking of the world's top ten analog vendors released by ICinsights, Texas Instruments (TI) continues to hold its position as the leading analog chip supplier in 2019 with $10.2 billion in analog chip sales and a 19% market share. ADI followed closely, followed by Infineon, ST and Skyworks ranked third, fourth, and fifth.

 

According to ICinsights' statistics for 2017 and 2018, the top ten analog chip companies have not changed much. TI and ADI are still the top two in the analog market, and none of the top ten analog chip manufacturers in the world has been kicked out.

 

If this is the analog chip market pattern after the merger climax in 2015, has the analog market changed before and after? From the data provided by ICinsights, on the whole, the top ten analog chip manufacturers in the world are still familiar formulas. The only difference is their rankings.

 

The ranking changes are also the biggest variable in the stable analog market.

 

Let’s talk about TI first, the leader in analog chips market. Since TI began to transform and develop its analog chip business in 1996, in the following five years, it has successively acquired SiliconSystems, Unitrode, PowerTrends and Burr-Brown. In 2011, in order to further expand its position in the analog field, TI spent US$6.5 billion to acquire the third-ranked National Semiconductor (NS) in 1995. After this acquisition, TI’s market share in general analog devices reached 17%. , Greatly surpassing the competitors behind, established their unshakable position in the analog chip market today.

 

From the second-ranked ADI, we see the "biggest" variable in the analog market. In the past few years from 2015 to 2020, two players that disappeared from the world's top ten analog chip manufacturers: Linear and maxim, they were all acquired by ADI.

 

In 2015, ADI surpassed Infineon's market share through the acquisition of Linear and became the second largest analog IC manufacturer after Texas Instruments, which changed the ranking of the analog market at that time. Last year, ADI spent 21 billion US dollars to acquire Maxim. Although it did not surpass the leader TI in market share, after the completion of this transaction, Maxim's strengths in the automotive and data center markets, and ADI's strengths in the industrial, communications, and digital medical markets, plus power management Maxim's application-oriented solutions can complement ADI's extensive product portfolio and help ADI to be more competitive in the next development.

 

In addition to the acquisitions by the top two analog chip manufacturers, other companies on the top ten list in the world are also making large and small acquisitions.

 

Among them, several acquisitions have to be mentioned, including Infineon's acquisition of Cypress for 9 billion euros, and analog IC is also one of Cypress's advantages. As we all know, Infineon is a well-known automotive electronics manufacturer, ranking high in power management and power semiconductors. After the acquisition of Cypress, they will not only make breakthroughs in the automotive chip field, they may also usher in better development in the field of analog chips.

 

As a car chip manufacturer, Renesas also holds a position in the analog chip market. In addition to the acquisitions of Intersil and IDT by Renesas in the past few years, Renesas once again has new news in terms of acquisitions this year-they will acquire Dialog for US$6 billion.

 

According to related reports, Renesas Electronics has about 30% of the global market share in the field of automotive microcontrollers, and has been trying to increase its market share of analog chips used to process signals such as sound, light, and temperature. The analog chip that Dialog focuses on can be used to process analog signals such as sound and light, and is mainly used in communications, automobiles, industry and other fields, accounting for 15% of the market.

 

The development of the automotive market has intensified competition among analog chip manufacturers to a certain extent, but apart from this market, the acquisition of analog chip manufacturers has not stopped. Two acquisitions initiated by Microchip are also worthy of attention. One is that in 2016, Microchip acquired Atmel for 3.56 billion dollars, and the other was that in 2018, Microchip acquired Microsemi for 8.55 billion dollars. It is understood that after Microchip's acquisition of Microsemi, it will not only strengthen its strength in the field of aerospace and defense, but also enhance Microchip's basic strength in the field of computing and communications.

 

From the perspective of these mergers and acquisitions, unless it is a merger between giants in the analog chip field, it is very difficult to shake the pattern of this market. In terms of the reasons, the analog chip market is a relatively mature market. In terms of technological development, leading companies have strong strength. On the other hand, the leading companies have very high gross profit, which will help them have the opportunity to expand more new products, seize emerging market areas, and continue to expand their advantages in the analog market.

 

This also shows that scale affects the development of analog chip manufacturers. Therefore, in the two waves of the development of the Internet of Things and the automotive market, the world's top ten analog manufacturers have also made multiple acquisitions.

 

But from another perspective, the acquisition of companies outside the list has not significantly improved their ranking in the analog market, but for the entire analog chip market, the acquisition of the top ten manufacturers may change the manufacturers outside the list. In other words, if the top ten manufacturers strengthen their acquisitions of vendors not on the list, it may also make the analog chip market more concentrated.

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