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Semiconductor grab: Silicon Valley chip companies making tasty acquisitions

Rex Crim, The Mercury News on

Published in Science & Technology News

"We are in a market consolidation phase in technology," said Rob Enderle, director of technology research firm the Enderle Group. "This means either buy or get bought, and Marvell appears to be in a buying mood. On paper, this looks like a great move for both companies, raising Marvell's market power significantly."

Combinations like Marvell and Cavium are seen as critical for chipmakers seeking to provide the backbones needed to run pioneering technologies with big potential for many industries.

"This deal speaks to a major consolidation trend in the chip world, which we expect to accelerate in 2018," said Dan Ives, chief strategy officer and head of technology research at GBH Insights. "Mature technological areas like PC and storage have forced semiconductor players to pivot and acquire in high growth areas to help transform their business models for the coming years, and this has forced this latest wave of consolidation."

Nothing shows chipmakers' voracious appetite for acquisitions to bolster their product arsenals like Broadcom's unsolicited $103 billion offer for communications chipmaker Qualcomm. Broadcom, which has its U.S. headquarters in San Jose and is in the process of moving its legal headquarters from Singapore to the United States, disclosed its offer Nov. 6. Chief Executive Hock Tan said a deal would "position the combined company as a global communications leader with an impressive portfolio of technologies and products."

Qualcomm has so far turned down Broadcom's offer, yet Broadcom has said it remains "fully committed" to pursuing Qualcomm. Broadcom could potentially raise its bid or launch a proxy fight with Qualcomm shareholders at that company's next annual meeting.

Meanwhile, both companies have moved forward with other acquisition plans. On Nov. 17, Broadcom completed its nearly $6 billion acquisition of networking switch, software and storage-product maker Brocade Communications, while Qualcomm is pushing ahead with its proposed $38 billion acquisition of Dutch chipmaker NXP Semiconductors. That deal would give Qualcomm a strong position in the growing automotive chip market.

 

Earlier this year, Santa Clara-based Intel also got in on the buying spree, finalizing its $15 billion acquisition of Mobileye, an Israeli maker of sensor technology used in self-driving cars.

"There is an arms race going on to be the leader in next generation areas such as AI, autonomous vehicles and cloud computing, among other areas," Ives said. "With roughly a trillion dollars over the next decade poised to be spent, semi vendors are in a battle royale for market share."

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