Semiconductor mergers and acquisitions, who is the next target of industry giants?

At the beginning of 2022, the global chip industry has ushered in a new round of mergers and acquisitions. According to incomplete statistics, as of April 25, 2022, a total of 13 mergers and acquisitions have occurred in the semiconductor field (merger termination events are not included).

Compared with the wave of semiconductor mergers and acquisitions in previous years, semiconductor mergers and acquisitions have gradually entered a stable period in recent years, which is reflected in the decrease in the order of magnitude and capital level of mergers and acquisitions in the past two years. This year's mergers and acquisitions are mainly small and medium-sized. .

Industry news shows that 2020 is an extraordinary year in the history of semiconductor mergers and acquisitions. The reason is that 6 large-scale semiconductor mergers and acquisitions were proposed in 2020, namely SK Hynix's acquisition of Intel's NAND flash memory business, Marvell's acquisition of Inphi, NVIDIA's acquisition of ARM, ADI's acquisition of Maxim, AMD's acquisition of Xilinx, and Universal Wafer. Acquired Siltronic in Germany. The total value of the six mergers and acquisitions amounted to US$119.41 billion. Due to the huge amount involved, all six mergers and acquisitions will only be concluded in 2021 or 2022. Among them, in February 2022, Universal Wafer terminated the acquisition of Siltronic and Nvidia terminated the acquisition of ARM.

There are mainly two large-scale mergers and acquisitions proposed in 2021, namely, Qualcomm and private equity SSW Partners will cooperate to complete the acquisition of Swedish auto technology company Veoneer, and semiconductor material supplier Entegris will acquire CMC, a similar company. $11 billion.

In 2022, as of April 25, a total of 13 semiconductor mergers and acquisitions have been counted, 7 of which have been completed, and the other 6 are in the process of mergers and acquisitions. It is worth noting that more than half of the mergers and acquisitions were newly announced this year. Among them, there was only one large-scale merger. It was an agreement between Tower and Intel for Merger Sub to acquire 100% equity of Tower, a semiconductor solution foundry company. For small and medium mergers and acquisitions.

In the past two years, most of the semiconductor mergers and acquisitions occurred in the middle reaches of the semiconductor industry, and the first two accounted for a larger proportion in the three links of design, manufacturing and packaging and testing. However, it is worth noting that when it comes to heavy asset factors such as manufacturing equipment and materials, the possibility of successful mergers and acquisitions will be greatly reduced due to both market and non-market factors.

In terms of specific fields, through the inventory of mergers and acquisitions in 2022, it can be seen that of the 13 semiconductor mergers and acquisitions this year, nearly half of the mergers and acquisitions focus on the data center market, and 3 mergers and acquisitions focus on chip manufacturing. This field seems to have become a battleground for semiconductor manufacturers.

With the emergence of high-quality targets in emerging fields, industry giants are strengthening their layout through industry mergers and acquisitions. For example, AMD acquired FPGA giant Xilinx and Israeli data storage solution provider Excelero, Shanghai Belling acquired analog chip company Sitar Technology, Intel acquired Israeli computing technology start-up company Granulate, etc.

In addition, the wave of core shortages in the past two years has continued, and the chip market demand is still strong. It is not rare for industry giants to expand their production capacity through mergers and acquisitions. For example, SK Hynix acquired foundry company Qifang Semiconductor, and it began to acquire Intel NAND flash memory in 2021. and storage business as well as wafer foundry Key Foundry. Or BelGaN acquires ON Semiconductor's Belgian 6-inch wafer fab, Tower and Intel agree that Merger Sub will acquire Tower, a semiconductor solution foundry, in the form of a merger.

From the perspective of corporate strength characteristics, global semiconductor mergers and acquisitions are dominated by leading players.

In the mergers and acquisitions in 2022, most of the acquirers and target parties are the world's leading companies or "leaders" in various segments. According to the data released by TrendForce, Qualcomm, NVIDIA, AMD, Marvell, and Xilinx will be among the top ten IC design companies in 2021. TOWER is also in TrendForce's top ten foundry rankings in the fourth quarter of 2021. SK hynix ranked fourth in terms of revenue among global NAND Flash brand manufacturers in the fourth quarter of 2021 by TrendForce. In addition, Murata, Resonant, PensandoSystems, and Veoneer are also leaders in each segment.

Leading companies have launched mergers and acquisitions one after another. The reason is closely related to the fact that large companies have continued to expand their scales, expand product lines, and develop new technologies in recent years to build a giant aircraft carrier ecosystem.

Such as Intel's acquisition of Tower. Tower is an Israeli foundry giant operating eight manufacturing plants in four geographic regions. Intel has announced the IDM2.0 strategy and Foundry plan since March 23, 2021. Industry speculation, through this transaction, Intel aims to make the foundry services division and the Tower organization into a fully integrated foundry business.

Or AMD buying Xilinx and PensandoSystems. The acquirer AMD is gaining momentum in CPU and GPU, and the acquiree Xilinx and PensandoSystems each occupy a high ground in the field of computing chips for FPGA and DPU. Through these two acquisitions, AMD has carried out heterogeneous computing on a variety of chips. Now AMD's business has completely covered CPU, GPU, FPGA, and DPU, and the layout of the entire cloud has been basically perfected.

On the other hand, in recent years, the global semiconductor M&A market has been basically finalized after experiencing the previous wave of mergers and acquisitions. The high-quality M&A targets in the market are becoming more and more scarce, so the scarce targets are hot in the capital market. For example, although Nvidia gave up the acquisition of ARM, the popularity of ARM has not diminished.  According to foreign media reports, SK Hynix co-CEO Park Jung-ho said that the company is considering joining a consortium to jointly invest in the acquisition of British chip maker ARM.