Even though all industries suffering from COVID, large-scale acquisitions still swept the semiconductor industry. Recently, NVIDIA swoops to acquired ARM for $40 billion, AMD plans an acquisition for Xilinx by $35 billion, while the latest news announced that SK Hynix will acquire Intel NAND for $10 billion.
Since the 1950s, the Top 10 in the semiconductor industry is constantly changing except Texas Instruments. Most outstanding semiconductor companies had become a legend only. Remember in 2015, The total scale of mergers and acquisitions over $120 billion, which set the highest merger record at that time.
In March 2,2015, NXP Semiconductor acquired another Industry giants Freescale for $11.8 billion to boost it to Top 10.
In May 28, 2015, Avago acquired Broadcom for up to $37 billion, made it to become the No.3, behind Intel and Qualcomm. Followed by the acquisition of Avago, Intel announces to acquire Altera for $16.7 billion.
Tsinghua Unigroup invested $3.8 billion in a shareholding in Western Digital (WD), boosting WD’s acquisition of SanDisk for $19 billion.
The merger and acquisition happened every year after 2015 but never broke the scale record. Compared with all acquisition scales from 2015 to today, NVIDIA’s $40 billion will become the top scale of acquisition.
In addition, if AMD acquires Xilinx, it will bring a huge influence to the FPGA market. As we can see, Xilinx announces the price of its chip is increase by 25%.
Plus Analog Devices Inc (ADI) acquisition of Maxim, the scale of the merger and acquisition will over $90 billion if the above two acquisitions are successful. It remains to be seen whether 2020 will become another big year for mergers and acquisitions and exceed the record of 2015.
Mr. Wally Rhines of Mentor said that the integration trend of the semiconductor industry is because the semiconductor industry is slowly maturing. Just like the steel and automobile industries before, the increase in revenue no longer drives the growth of profits and corporate value, while reducing costs is the key. At this time, acquire competitors to achieve better economies of scale and reduce R&D expenses is a nice choice. Simultaneously, the industries are no longer develop rapidly, and there are fewer opportunities for new products and technological innovations. Ultimately they will only form an oligopoly of large companies.