6 Biggest Blowout Semiconductor Acquisitions So Far In 2015

Semiconductor Consolidation

Within the past year, slowing growth and rising costs drove larger deals in the chip industry. According to a report by Dealogic, referred to in The Wall Street Journal, chip companies have revealed $100.6 billion in mergers and acquisitions so far in 2015, already surpassing the $37.7 billion in deals announced in 2014.

The increased rate of acquisitions comes as the chip industry faces a number of challenges. Market research firm Gartner predicted that worldwide semiconductor sales will decline 0.8 percent in 2015, the first revenue decline since 2012.

Following are five blowout acquisitions over the past few months among larger chip companies, including Intel's planned $16.7 billion acquisition of Altera and Avago Technologies' $37 billion buy of Broadcom Corp.

Dialog Semiconductor-Atmel

Dialog Semiconductor, a U.K.-based company that sells chips to manage power in high-end smartphones, in September said it will acquire Atmel in a $4.6 billion cash and stock deal.

Atmel, a San Jose, Calif.-based company, sells microcontrollers that provide low-power, high-performance technology for consumer and business hardware. This include the Atmel AVR 8- and 32-bit microcontrollers, Atmel Smart ARM processor-based microcontrollers and 8051 architecture microcontrollers. Analysts said that the deal will help Dialog become a major player in the Internet of Things space, with chips for connected cars and wearables.

The transaction is expected to close in the first quarter of 2016, according to Dialog.

Lam Research—KLA-Tencor

Fremont, Calif.-based Lam Research, which makes equipment used in semiconductor manufacturing, said Oct. 21 that it plans to acquire KLA-Tencor in a $10.6 billion deal.

KLA-Tencor, a Milpitas, Calif.-based company, supplies process control and yield management products for the semiconductor and data storage industry, specifically making equipment used to spot defects in processed chips. Meanwhile, Lam Research's products help processing steps during the semiconductor manufacturing flow, such as thin film deposition, plasma etch and wafer cleaning.

The $10.6 billion deal, which is expected to close in mid-2016, will help Lam Research sell machines for both making and inspecting wafers.

NXP Semiconductors-Freescale Semiconductor

Dutch chip maker NXP Semiconductors on March 2 said it had agreed to buy Freescale Semiconductor in an $11.8 billion cash and stock deal.

NXP said it would merge operations in a deal valuing the combined company at more than $40 billion. The deal will help NXP expand its market share in analog chips for cars as the two companies combine their technologies to develop advanced vehicles.

European Union regulators approved the acquisition in September after the companies agreed to sell assets to alleviate regulator concerns that the merger would lead to price rises and reduced customer choice.

Intel-Altera

Santa Clara, Calif-based Intel in June disclosed plans to acquire custom-design semiconductor manufacturer Altera in a blockbuster deal valued at $16.7 billion, or $54 a share.

Altera manufactures field programmable gate arrays (FPGAs), which include programmability, security and high performance for Internet of Things solutions, such as Smart City infrastructure applications. The acquisition is necessary for boosting Intel's increasingly popular Internet of Things business. Intel said it plans to offer Altera's FPGA products along with its Xeon data server chip portfolio.

Intel said it expects the acquisition to close in two to five months.

Western Digital-SanDisk

Irvine, Calif.-based hard-drive vendor Western Digital on Oct. 21 agreed to buy SanDisk in a cash-and-stock $19 billion deal. Milpitas, Calif.-based SanDisk's portfolio, which includes mobile solutions such as iNAND embedded flash products for tablets, multimedia players and smartphones, could help Western Digital keep up with the mobile explosion's impact on the storage industry.

The $19 billion deal will be financed by Western Digital through a combination of cash, debt and stock. The transaction is expected to close in the third quarter of 2016.

Avago Technologies-Broadcom

Avago Technologies, a Singapore chip maker, said May 28 it would acquire semiconductor manufacturer Broadcom in a deal estimated to be worth $37 billion.

The deal, which is expected to close by the first quarter of 2016, will help to expand Avago's offerings with Irvine, Calif.-based Broadcom's Internet of Things platform. Broadcom manufactures networking ICs for data, voice and video applications in the wireless and broadband communications space. The company offers out-of-the-box connectivity platforms for connected devices and the Internet of Things, such as home automation, beacons and connected cars.

Avago Technologies has acquired up to five companies over the past few years, including its purchase of storage components provider LSI in 2014 for $6.6 billion.