Infineon’s decision to spend $3 billion (€2.3 billion) to buy a U.S. rival, California-based International Rectifier, is the first sign of a long-predicted wave of industry consolidation in the computer chip business, which has been beset by falling prices and cut-throat competition, experts said.
On its face, the merger of the two companies, which will create a chipmaker with €4.5 billion ($5.9 billion) in annual sales, appears to be complimentary.
Infineon, spun off from German engineering firm Siemens in 1999, makes power regulating semiconductors for cars, industrial electronics and for telecom devices and mobile phones. Its strength lies in high-power, high-voltage products.
International Rectifier makes chips that manage power flow in satellites, aircraft, cars and lighting systems and specializes in lower-power, lower-voltage devices.
The American company is five times smaller than Infineon and has annual sales of $1 billion.
One analyst called Infineon’s purchase costly and shares of the chipmaker, based in Neubiberg, Germany, near Munich, were largely unchanged following the announcement.
But in the first half of this year, the global semiconductor market grew, with revenue of $160 billion through June, an 11 percent increase from the same period a year ago, according to industry figures.