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IC Insights: Semiconductor mergers and acquisitions heat down in the second quarter

  • October 7, 2021
  • 292

The consulting agency IC Insights updated the "2021 Macleans Report" in September, showing that the total amount of M&A transactions in the semiconductor industry from January to August this year reached 22 billion US dollars, of which 16.2 billion US dollars in the second quarter, compared with 15.8 billion US dollars in the first quarter.


From January to August this year, 14 semiconductor companies announced merger plans, with an average transaction value of 1.6 billion US dollars, which is the same as the number of agreements in the first eight months of 2020, but the average transaction value is slightly lower than the 1.7 billion US dollars during the period.


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According to the report's analysis, in the second half of 2020, after the epidemic has been brought under certain control, the operating conditions of the semiconductor industry have stabilized, making the value of mergers and acquisitions for the entire year of 2020 jumped to the highest annual record of US$117.9 billion, only from September to December. During the month, the total amount of semiconductor M&A transactions reached 94.5 billion U.S. dollars.


During this period, four large-scale transactions have attracted attention: NVIDIA plans to spend 40 billion US dollars to acquire ARM; AMD will acquire Xilinx for 35 billion US dollars; Marvell completed the 10 billion acquisition of Inphi; Intel announced that it will be purchased for 9 billion US dollars. Sold its NAND flash memory business and 300mm chip factory in China to SK Hynix. Among them, three are still waiting for regulatory approval.


This strong momentum of mergers and acquisitions continued into the beginning of 2021. In the first quarter of this year, the total number of mergers and acquisitions of chip companies, business units, product lines and related assets set a new record in the history of this quarter. However, in the next five months, the M&A trend in the semiconductor industry has declined.

Like last year, the total number of mergers and acquisitions in 2021 may be significantly boosted in the coming months, provided that agreements are reached on potentially large deals reported by the media and other major initiatives taken by companies seeking to strengthen their positions in high-growth markets. These transactions may include: Intel may acquire GlobalFoundries for approximately US$30 billion to strengthen its new foundry business; Western Digital and Kioxia are discussing a possible merger of more than US$20 billion.


The report further pointed out that, as in the past decade, semiconductor mergers and acquisitions in 2021 are mainly driven by the following two factors:

1) Industry integration of some products and manufacturing sectors;

2) IC companies hope to increase their presence in high-end applications, especially industrial Internet of Things (IIoT), robotics, autonomous vehicles and driver assistance automation, artificial intelligence (AI) and machine learning capabilities, image recognition, and embedding The new high-speed wireless connection of the integrated system, including the construction of 5G cellular network.


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