The historic flood of mergers and acquisitions that swept through the semiconductor industry in 2015 and 2016 slowed significantly in 2017 and then declined again in 2018, but the total value of M&A deals reached in the latter year was nearly double the annual average for the first half of this decade. Acquisition deals reached in 2018 for semiconductor companies, business units, product lines, and related assets had a combined value of $23.2 billion, compared to $28.1 billion in 2017, according to data compiled by IC Insights. The values of M&A deals reached in these years were significantly lower than the record $107.3 billion set in 2015 (Figure 1).
The original 2016 M&A total of $100.4 billion was reduced by $41.1 billion to $59.3 billion due to the failure to complete several major acquisition deals, including the largest proposed deal in semiconductor history: Qualcomm's planned $39 billion purchase of NXP Semiconductor before being canceled in July 2018. Prior to the semiconductor acquisition boom that emerged four years ago, M&A deals in the chip industry had an average total annual value of $12.6 billion over the 2010-2014 period.
The two largest acquisition deals in 2018 accounted for approximately 65% of total M&A activity for the year. In March 2018, power and mixed-signal discrete semiconductor supplier Microsemi agreed to be acquired by Microchip Technology for $8.35 billion in cash. Microchip stated that the acquisition of Microsemi would strengthen its position in computing applications, communications, and wireless systems. The transaction was completed in May 2018. Mixed-signal IC supplier IDT agreed in September 2018 to be acquired by Renesas Electronics for $6.7 billion in cash. Renesas believes the acquisition of IDT will bolster its position in automotive integrated circuits for advanced driver assistance systems and autonomous vehicles. The acquisition of IDT is expected to be completed in June 2019.
Only two other semiconductor acquisition announcements in 2018 were valued at more than $1 billion. In October 2018, memory maker Micron Technology said it would exercise an option to acquire full ownership of its joint venture, IM Flash Technology, from Intel for about $1.5 billion in cash. Micron has begun the process of buying Intel’s non-controlling stake in the non-volatile memory manufacturing and development joint venture, located in Lehi, Utah. The transaction is expected to close in the second half of 2019. In September 2018, China’s largest contract smartphone maker, Wingtech Technology, began acquiring shares in Nexperia, a Dutch supplier of standard logic and discrete semiconductors that spun off from NXP in 2017 with financial backing from Chinese investors. Wingtech launched two rounds of share buybacks from Nexperia’s Chinese owners with a combined value of nearly $3.8 billion. The company expects to have majority ownership of Nexperia (approximately 76% of the shares) in 2019.
