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Thread: Value of Semiconductor Industry M&A Deals Slows Dramatically in 1H17

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    Value of Semiconductor Industry M&A Deals Slows Dramatically in 1H17

    Numerous smaller deals have been made but “megadeals” have yet to surface this year.

    In its upcoming Mid-Year Update to The McClean Report 2017 (to be released later this week), IC Insights addresses the changing landscape for semiconductor industry mergers and acquisitions.

    The historic flood of merger and acquisition agreements that swept through the semiconductor industry in the past two years slowed to a trickle in the first half of 2017, with the combined value of about a dozen transactions announced in 1H17 reaching just $1.4 billion.

    In the first halves of 2016 and the record-high M&A year of 2015, the combined value of acquisition agreements in 1H16 and 1H15 totaled $4.6 billion and $72.6 billion, respectively (Figure 1). Last year, M&A got off to a slow start—compared to the record-breaking pace in 1H15—but several large transactions announced in 3Q16 pushed the 2016 total value in semiconductor acquisitions to nearly $100 billion and within striking distance of the all-time high of $107.3 billion set in 2015. A few major semiconductor acquisitions were pending or rumored to be in the works during July 2017, but it is unlikely that a 2H17 surge in purchase agreements will bring this year’s M&A total value anywhere close to those of 2016 and 2015.

    The big difference between semiconductor M&A activity in 2017 and the prior two years has been the lack of megadeals. Thus far, only one transaction in 2017 has topped a half billion dollars (MaxLinear’s $687 million cash acquisition of analog and mixed-signal IC supplier Exar announced in March 2017 and completed in May). There were seven announced acquisitions with values of more than $1 billion in 2016 (three of which were over $10 billion) and 10 in 2015 (four of which were over $10 billion). IC Insights’ M&A list only covers semiconductor suppliers and excludes acquisitions of software and systems businesses by IC companies (e.g., Intel’s planned $15.3 billion purchase of Mobileye, an Israeli-based provider of digital imaging technology for autonomous vehicles, announced in March 2017).

    The 250+ page Mid-Year Update to the 2017 edition of The McClean Report further describes IC Insights’ updated forecasts for the 2017-2021 time period.

    Value of Semiconductor Industry M&A Deals Slows Dramatically in 1H17-semiconductor-acquisitions-2017-jpg

    Figure 1

    Report Details: The 2017 McClean Report

    Details on the global IC market forecast and trends within the IC industry are provided in the 2017 edition of The McClean Report—A Complete Analysis and Forecast of the Integrated Circuit Industry (released in January 2017). A subscription to The McClean Report includes free monthly updates from March through November (including a 250+ page Mid-Year Update), and free access to subscriber-only webinars throughout the year. An individual-user license to the 2017 edition of The McClean Report is priced at $4,090 and includes an Internet access password. A multi-user worldwide corporate license is available for $7,090.


    To review additional information about IC Insights’ new and existing market research reports and services please visit our website: IC Insights | Semiconductor Market Research.

    More Information Contact
    For more information regarding this Research Bulletin, please contact Rob Lineback, Senior Market Research Analyst at IC Insights. Phone: +1-817-731-0424, email: rob@icinsights.com

    PDF Version of This Bulletin
    A PDF version of this Research Bulletin can be downloaded from our website at Research Bulletins | IC Insights

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    A few factors behind the slowdown in deals:

    -Valuations have moved up, making the numbers a little more difficult for the dealmakers to justify.
    -Regulators are starting to give these deals a bit more scrutiny. QCOM/NXPI seems to be held up by regulators, and while I wouldn't have thought Broadcom/Brocade would have faced major regulatory hurdles, it seems to be attracting some attention.
    -There are fewer attractive deals out there now than a couple years ago. The best targets have already been picked off.

    I still think XLNX is a potential take out candidate, maybe after Broadcom finishes digesting Brocade. I also think there could be more surprises from China - I thought the move on Imagination Tech was interesting. It could be a trail balloon for a larger deal down the road. EDA and IP are two areas that are also ripe for continued consolidation, following the consolidation in fabless space.

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    Quote Originally Posted by count View Post
    A few factors behind the slowdown in deals:

    -Valuations have moved up, making the numbers a little more difficult for the dealmakers to justify.
    -Regulators are starting to give these deals a bit more scrutiny. QCOM/NXPI seems to be held up by regulators, and while I wouldn't have thought Broadcom/Brocade would have faced major regulatory hurdles, it seems to be attracting some attention.
    -There are fewer attractive deals out there now than a couple years ago. The best targets have already been picked off.
    I agree and will add a couple more observations:

    TSMC had a slow 1H 2017 due to soft smartphone demand

    I talked with a bunch of small to medium EDA and IP companies at #54DAC last month and found they too were have a soft 1H 2017 noting that deals are being "pushed out".

    Cadence just reported and hardware sales (Prototype and Emulator boxes) were less than expected and those big customers are SoC people (smartphones).

    Unfortunately Mentor no longer reports (emulators) but Synopsys will report next month and it will be interesting to see if the hardware (Prototype) softness continues.

    We could be heading for a slow down? If so maybe M&A will pick up after valuations drop a bit?

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