Value of Semiconductor Industry M&A Deals Slows Dramatically in 2017
January 19, 2018 | IC InsightsEstimated reading time: 2 minutes
The historic flood of merger and acquisition agreements that swept through the semiconductor industry in 2015 and 2016 slowed significantly in 2017, but the total value of M&A deals reached in the year was still more than twice the annual average in the first half of this decade, according to IC Insights’ new 2018 McClean Report.
In 2017, about two dozen acquisition agreements were reached for semiconductor companies, business units, product lines, and related assets with a combined value of $27.7 billion compared to the record-high $107.3 billion set in 2015 and the $99.8 billion total in 2016. Prior to the explosion of semiconductor acquisitions that erupted several years ago, M&A agreements in the chip industry had a total annual average value of about $12.6 billion between 2010 and 2015.
Two large acquisition agreements accounted for 87% of the M&A total in 2017, and without them, the year would have been subpar in terms of the typical annual value of announced transactions. The falloff in the value of semiconductor acquisition agreements in 2017 suggests that the feverish pace of M&A deals is finally cooling off. M&A mania erupted in 2015 when semiconductor acquisitions accelerated because a growing number of companies began buying other chip businesses to offset slow growth rates in major end-use applications (such as smartphones, PCs, and tablets) and to expand their reach into huge new market opportunities, like the Internet of Things (IoT), wearable systems, and highly “intelligent” embedded electronics, including the growing amount of automated driver-assist capabilities in new cars and fully autonomous vehicles in the not-so-distant future.
With the number of acquisition targets shrinking and the task of merging operations together growing, industry consolidation through M&A transactions decelerated in 2017. Regulatory reviews of planned mergers by government agencies in Europe, the U.S., and China have also slowed the pace of large semiconductor acquisitions.
One of the big differences between semiconductor M&A in 2017 and the two prior years was that far fewer megadeals were announced. In 2017, only two acquisition agreements exceeded $1 billion in value (the $18 billion deal for Toshiba’s memory business and Marvell’s planned $6 billion purchase of Cavium). Ten semiconductor acquisition agreements in 2015 exceeded $1 billion and seven in 2016 were valued over $1 billion. The two large acquisition agreements in 2017 pushed the average value of semiconductor M&A pacts to $1.3 billion. Without those megadeals, the average would have been just $185 million last year. The average value of 22 semiconductor acquisition agreements struck in 2015 was $4.9 billion. In 2016, the average for 29 M&A agreements was $3.4 billion, based on data compiled by IC Insights.
Suggested Items
Cadence Reports First Quarter 2024 Financial Results
04/23/2024 | Cadence Design Systems, Inc.Quarter-end backlog was $6.0 billion and current remaining performance obligations ("cRPO"), contract revenue expected to be recognized as revenue in the next 12 months, was $3.1 billion.
NASA Sets Path to Return Mars Samples, Seeks Innovative Designs
04/16/2024 | NASANASA Administrator Bill Nelson shared on Monday the agency’s path forward on the Mars Sample Return program, including seeking innovative designs to return valuable samples from Mars to Earth.
Europe’s IT, Business Services Sector on the Rebound in Q1: ISG Index
04/15/2024 | BUSINESS WIREEurope’s demand for IT and business services in the first quarter rose for the first time in a year, powered by growth from the banking, financial services and insurance (BFSI) sector, according to the latest state-of-the-industry report from Information Services Group (ISG), a leading global technology research and advisory firm.
Global Semiconductor Equipment Billings Slip to $106.3 Billion in 2023
04/10/2024 | SEMIWorldwide sales of semiconductor manufacturing equipment edged down 1.3% to $106.3 billion in 2023 from an all-time record of $107.6 billion in 2022, SEMI, the industry association representing the global electronics design and manufacturing supply chain, reported today. The data is now available in the Worldwide Semiconductor Equipment Market Statistics (WWSEMS) report.
Wistron’s Wise Cap Invests in GEOSAT Aerospace & Technology
04/09/2024 | WistronWistron Corporation announced that its wholly-owned subsidiary, Wise Cap Limited Company, has participated in a private placement of common shares for GEOSAT Aerospace & Technology Inc., investing a total of NT$1.0 billion.