Semiconductor giants such as Qualcomm and Intel set off a wave of mergers and acquisitions

Qualcomm, the world's largest smartphone chip supplier, announced on August 14th that it has completed its acquisition of British chip manufacturer CSR for $2.4 billion. After the acquisition, CSR's indirect wholly-owned subsidiary, Cambridge Silicon Radio Limited, will be renamed Qualcomm Technologies International Ltd and become a subsidiary of Qualcomm. This will help Qualcomm further expand beyond its mobile business, including the Internet of Things and automotive sectors.

This is already the fourth major merger and acquisition in the semiconductor industry this year. On June 1st, Intel announced its agreement to acquire Silicon Valley chipmaker Altera for $16.7 billion, marking the largest transaction in Intel's history. On May 28th, Avago agreed to acquire Broadcom in a cash and equity manner, with a total transaction price of approximately $37 billion. In March, NXP acquired Freescale for approximately $11.8 billion.

This series of acquisition actions clearly shows that the chip industry is in a wave of mergers and acquisitions. Accelerating the integration efforts of industry giants will make the intellectual property competition in the highly technology-intensive chip industry increasingly fierce.

Qualcomm's acquisition of CSR is a strategic move with a focus on the future. Currently, the development of the smartphone industry has reached a high point, and CSR's technological advantage in the field of the Internet of Things is a key factor attracting Qualcomm. "Shi Hua, a senior figure in the information technology field, told the Technology Daily reporter.

It is understood that this merger and acquisition has been brewing for a long time. This transaction was proposed as early as October last year, but due to touching the red line of antitrust and strict regulatory scrutiny, Qualcomm did not immediately acquire CSR.

Qualcomm CEO Steve Morenkov stated that CSR's complementary advantages in connectivity, audio technology, and system level chips will help strengthen Qualcomm's position in the Internet of Things and automotive industry, while complementing a wide and extremely advanced product portfolio.

CSR Company (Cambridge Silicon Radio) was born in Cambridge, UK in 1998. Its early technology was mainly in the audio field, and it was listed on the London Stock Exchange in 2004. In January 2007, it acquired Nordnav Technologies and Cambridge Positioning Systems, which have been committed to software GPS systems.

In 2009, CSR successfully acquired SiRF Technology Holdings for $136 million. SiRF brought a combination of intellectual property rights including GPS and A-GPS, a dead reckoning and position center platform, and CSR became one of the world's top ten fabless semiconductor manufacturers. Among them, six of the top seven mobile phone manufacturers in the world are CSR customers, in addition, they also include the top five personal navigation device manufacturers in the world, two top automotive telematics suppliers, and other leading automotive and consumer electronics suppliers.

CSR is a high-tech enterprise that gathers a large number of industry patents. Three years ago, Samsung acquired some of CSR's mobile phone patents for $310 million in cash, "said Shi Hua. CSR's technology, such as GPS chips, Bluetooth communication chips, and IoT chips, holds a leading position in the fields of Bluetooth, Bluetooth intelligence, and audio processing chips, and is considered the best supplement for Qualcomm's entry into the IoT field.

Intel's $17 billion cash acquisition of Altra

Qualcomm's acquisition is once again reminiscent of another acquisition two months ago: in June, Intel announced its acquisition of programmable logic chip giant Altra for approximately $17 billion. This transaction is the largest acquisition in Intel's history.

Buying out with $17 billion in cash is a big deal, even for a giant like Intel.

When Intel announced its acquisition, some media had calculated Intel's "family background": at that time, Intel had $14 billion in cash and short-term investments, as well as $8.2 billion in long-term investments. This means that Intel will inevitably need to fund this transaction through cash and debt in its hands. Some analysts jokingly refer to it as "Intel's debt acquisition".

This behavior also reflects Intel's level of concern about this acquisition.

Altra has over 3000 employees in 19 countries worldwide. The chips produced are mainly used in telecommunications and wireless communication equipment, involving industries such as military equipment, automobiles, networks, and industry.

In Intel's own view, the intellectual property portfolio of Altra brought about by this exchange will help it consolidate its advantages in server and data center businesses, and help it promote products launched in the field of the Internet of Things. Intel CEO Ke Zaiqi said in an analyst conference call, "We can make the next generation of semiconductors not just better, but more.

Intel does attach great importance to this acquisition. The first quarter financial report released earlier showed that Intel's data center division had revenue of $3.7 billion, a year-on-year increase of 19%. In the eyes of the outside world, the strong revenue of Intel's Xeon series products has directly improved the crisis caused by the decline in the PC industry.

From the current perspective, this acquisition will provide significant assistance to Intel in terms of technology and market.

Industry insiders have analyzed that if Intel's Xeon series products for enterprise servers and workstations are combined with Altera FPGA (Field Programmable Gate Array), it is expected to accelerate some tasks in data centers by 10 times, while CSI (Common System Interface) will accelerate by 2 times, which will effectively consolidate Intel's market share in the server field.

Merger of giants leads to increased patent barriers

"The high concentration ratio of the industry will undoubtedly bring considerable pressure on the late comers to catch up. These mergers and acquisitions in the chip field will increase the technological leadership of Intel, Qualcomm and other enterprises, making it more difficult for Chinese chip enterprises to catch up," said Shi Hua.

Taking Intel's acquisition of Altra as an example, this move will significantly strengthen Intel's patent leadership advantage. Intel has long been committed to the development and patent layout of key technologies in the information field, and has established a huge patent accumulation in the field of processor chip technology with traditional advantages. Altra has over 3300 US patent authorizations and 550 non US patent authorizations, as well as 1200 pending patent applications worldwide. Altra has accumulated over 335 patent applications in China. The acquisition has further expanded Intel's patent advantages in core key technologies such as general-purpose processors and specialized processor chips. This also means that the difficulty for Chinese enterprises to evade their patented technologies will significantly increase.

After the release and implementation of the "Outline for Promoting the Development of the National Integrated Circuit Industry", Professor Wei Shaojun, the director of the Institute of Microelectronics at Tsinghua University, conducted an analysis of the integrated circuit industry in an interview with a reporter from Science and Technology Daily. He believed that some of the core chips relied on in the national strategic development are basically dependent on foreign countries. If enterprises want to obtain policy support, chips should first be able to meet national strategic needs. At the same time, he also specifically mentioned the current situation of "two heads out".

The phenomenon of "two ends outside" is a peculiar phenomenon in the integrated circuit industry. But the reason is not complex: our manufacturing enterprises are relatively weak, and our design enterprises are also relatively weak. Weaker manufacturing companies need to find stronger design companies to collaborate with. Weaker design companies also need to find stronger manufacturing companies to collaborate with. Both are weak, so 'both ends are out'.

Firstly, it is to meet the strategic needs of the country. Secondly, it is to address the phenomenon of industrial development being at both ends of the world. That is to say, our design enterprises are processing outside; manufacturing enterprises are designing outside. "Wei Shaojun said," It is still necessary to closely combine manufacturing and design, and to intentionally combine knowledge

In March 2015, chip manufacturer NXP agreed to acquire another semiconductor manufacturer, Freescale, for $11.8 billion. After the merger, the market value of the two companies will exceed $40 billion. This acquisition will give birth to a leading enterprise in the automotive and industrial semiconductor fields. The Amazon Kindle e-book reader uses a Freescale chip.

In May 2015, Anhua High tech and Botong jointly announced that Anhua High tech would acquire Botong for approximately $37 billion. In the $37 billion acquisition quotation, cash accounted for $17 billion, and Anhuagao's stock was worth approximately $20 billion. The new company name after the merger has been designated as "Broadcom Limited". After the merger of Anhuagao and Botong, they will become the third largest semiconductor manufacturer in the United States by revenue, ranking behind Intel and Qualcomm. After the merger, the enterprise value of the new company will reach 77 billion US dollars, with a total annual revenue of approximately 15 billion US dollars. The transaction was originally scheduled to be completed in March 2016, and currently some investors of Botong Company are initiating a class action lawsuit to organize the acquisition.

In June 2015, Intel announced its agreement to acquire Silicon Valley chipmaker Altera for $16.7 billion, marking the largest transaction in Intel's history.

In July 2015, Tsinghua Holdings planned to acquire American chip manufacturer Micron Technology. There are reports that Ziguang Group's bid is about $23 billion, and as of now, there has been no breakthrough in this acquisition intention.

August 2015: Qualcomm, the world's largest smartphone chip supplier, announced on August 14th that it had completed its acquisition of British chip manufacturer CSR for $2.4 billion. After the acquisition, CSR's indirect wholly-owned subsidiary, Cambridge Silicon Radio Limited, will be renamed Qualcomm Technologies International Ltd and become a subsidiary of Qualcomm. This will help Qualcomm further expand beyond its mobile business, including the Internet of Things and automotive sectors.