Acquisition rebound lifts 2019 to third-largest year

The 2019 value of semiconductor acquisition agreements reached the third-highest annual total ever, but the year was still far behind 2015 and 2016 (Figure 1).

It appears the pace of semiconductor acquisitions has moved up to a ‘new normal’ level since 2015—perhaps in the $25-30bn range per year—as consolidation in the chip industry quickens and large suppliers strike deals to add new products and technologies for higher growth this decade, in such areas as machine-learning and artificial intelligence, autonomous vehicles, human recognition, computer vision, virtual/augmented reality, and high-speed wireless connections to the ever-expanding Internet of Things.

M&A announcements surged in 2015 with the total value of deals hitting a record-high $107.7bn, followed by $100.7bn in acquisition agreements in 2016 (just $59.8bn of those transactions were completed in the following years because several major ones were dropped after failing to win approval by government regulators).

The average annual value of semiconductor M&A agreements between 2015 and 2019 is more than four times the average in the prior five-year period (2010-2014)—more than 4.5x if $100.7bn is used for 2016 announcements. It is important to note that these purchase agreements cover semiconductor companies, chip divisions, business units, development teams and product lines, intellectual property (IP), process technologies, and wafer fabs. IC Insights’ M&A list excludes transactions involving semiconductor capital equipment suppliers, material producers, chip packaging and testing companies, and design automation software firms.

Seven of the acquisition agreements in 2019 exceeded $1.0bn. Here is where those seven acquisitions rank among the 50 largest semiconductor M&A deals in history.

• #9 is now Infineon’s planned purchase of Cypress Semiconductor for $9.4 billion.
• #12 is Nvidia’s $6.9 billion deal for interconnect and networking products supplier Mellanox.
• #18 is AMS’s pending $5.1 billion takeover of optoelectronics maker OSRAM.
• #36 is Intel’s $2.0 billion purchase of AI-chip developer Habana Labs in Israel.
• #38 (tied) is NXP’s acquisition of Marvell’s Wi-Fi Connectivity business for $1.8 billion.
• #45 is ON Semiconductor’s $1.1 billion purchase of Wi-Fi solutions supplier Quantenna Communications.
• #46 is now Apple’s $1.0 billion takeover of Intel’s smartphone modem business.