Semiconductor mega-deals

The Chips Are Up

chipmaker pic f1online
The devil is in the detail, not just with semiconductors, but takeovers too.
  • Why it matters

    Why it matters

    European chipmakers, once a major force in the industry, are having to line up major acquisitions to buy back market share.

  • Facts

    Facts

    • The global chipmaking industry grew by an average of 15 percent a year between 1980 and 2000, but growth has since fallen.
    • In 2014, E.U. chipmakers generated just 9 percent of global sales; South Korea alone provided 17 percent.
    • As well as Dialog, chipmakers Infineon and NXP have also recdently acquired large U.S. rivals.
  • Audio

    Audio

  • Pdf

First it was Infineon, then NXP and now Dialog Semiconductor. Europe’s chipmakers are on a shopping spree in the United States. After years of dwindling sales, the European semiconductor sector is switching to the offensive.

Dialog, which was founded in Germany but now has its headquarters near London, announced at the weekend that it is buying U.S. competitor Atmel for €4.6 billion (€4.1 billion). The company – a major supplier to Apple – is using the acquisition to expand its customer base.

A wave of takeovers has been underway in the chip industry for some time, but European manufacturers had not been involved until now. NXP, based in the Dutch city of Eindhoven, is in the process of acquiring U.S. competitor Freescale for $12 billion. Last summer, Munich-based Infineon acquired U.S. rival International Rectifier for €3 billion.

The European chip industry has had a tough few years. In 2014, E.U. producers generated just 9 percent of global sales. South Korea alone was responsible for 17 percent.

There is a good reason why semiconductor produces are merging. Growth in the industry leads to predatory competition. The industry grew by an average of 15 percent a year between 1980 and 2000. Growth rates have declined since the turn of the millennium, with industry association ZVEI estimating an additional increase of about 6 percent in the last few years.

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