High demand in chip manufacturing has led to global mergers and acquisitions to become a key strategy in the semiconductor industry.
Due to a year of tremendous change, we see an unprecedented situation where semiconductor deals are made in the $100bn range. 2020 has set a record global M&A activity, with a value of $118bn, mainly fueled by sizable transactions such as Analog Devices/Maxim and Nvidia/ARM. The consolidation movement within the semiconductor industry is continuing in 2021 and the semiconductor landscape is changing rapidly.
One of this year’s significant mergers and acquisitions would definitely include the acquisition of Dialog Semiconductor by Renesas.
Significant Mergers and Acquisitions of 2021
Another big merger of 2021 was ADI’s acquisition of Maxim Integrated. With this acquisition, Analog Devices created synergies in the area of autonomous driving, 5G networks, as well as integrated circuits.
Recent noteworthy acquisitions were Onsemi’s acquisition of GT Advanced Technologies (GTAT), a producer of SiC substrates, for $415 million. The acquisition as well as their recent rebranding is expected to put Onsemi in a better position to secure and grow its supply of a key material for next-generation semiconductors, and to meet growing customer demand for products used in electric vehicles, EV charging and energy infrastructure.
Recently, Nexperia acquired NWF (Newport Wafer Fab), after being a customer of NWF for many years. With the purchase, it has obtained 100% ownership of the semiconductor production facility.
Incentives, Scrutiny and Outlook
Global government incentives will surely lead to even more merger and acquisition news within the next few months and years and will be reshaping the semiconductor industry. Over the next five years, local government incentives will continue impacting fab economics and influence future fab locations. Governments are putting semiconductor manufacturing at the top of their agenda. In the United States, the Senate recently passed the “U.S. Innovation and Competition Act” which contains $52bn in subsidies for semiconductor manufacturing and R&D by 2025. This investment into innovation could lead to significant changes. At this time, the bill’s path in the House of Representatives is unclear.
The consolidating movement within the semiconductor industry has also led to an increase in scrutiny of the deals recently made. An example is Nvidia’s acquisition that has been challenged by regulators. Their $40bn bid for ARM raised competitive concerns. Semiconductors are more and more seen as a national security priority, with many transactions in the semiconductor industry having been blocked by regulators or awaiting approval.
Despite the increase in scrutiny, the world’s largest semiconductor companies are planning to invest billions more in new manufacturing sites to meet new demand and address geopolitical tensions.
FabExchange has made a move into the corporate restructuring space with some recent large-scale transactions. Most notably being the acquisition of the ON Semi fab in Rochester, NY. If your company is looking to bolster its manufacturing capabilities by acquiring another business unit, or shed a business unit which doesn’t fit into your companies’ long-term plans, please reach out to our Director of Strategy, Shaun Flynn at shaun.flynn@fabexchange.com or (669) 252-0009 to discuss how FabExchange can help in the process.