Chip M&A deals top $22 billion

According to IC Insights’ September Update of the 2021 McClean Report, while the pace of M&A activity has slowed during the course of 2021 this year’s total M&A value has still topped $22.0bn.

Strong M&A momentum carried over from 2020 saw total activity in the first quarter of 2021 reach a total value of almost $16bn.

However, the recent slowdown means that the combined value of Semiconductor M&A agreements announced in the first eight months of 2021 was slightly below the total for the same periods in 2019 and 2020 ($24.7 billion and $23.4 billion, respectively).

In 2020 M&A value jumped to an all-time annual record of $117.9bn after business conditions stabilized in the second half of last year from the Covid-19 virus pandemic.

Between September and December 2020, the combined value of semiconductor M&A deals amounted to $94.5 billion with the announcements of four megadeals in the four-month period: Nvidia’s planned $40bn acquisition of processor-design technology supplier ARM; Advanced Micro Devices’ pending $35bn purchase of FPGA leader Xilinx; Marvell Technology’s completed $10bn takeover of interconnect chip supplier Inphi; and Intel’s announced $9bn sale of its NAND flash business and 300mm fab in China to SK Hynix.

As with 2020, the 2021 M&A total could get a significant boost in the next few months, if agreements are reached in potential megadeals that have been reported are finalised.

In the summer, Intel was reportedly in talks to buy GlobalFoundries for about $30bn to strengthen its renewed wafer foundry efforts, and a possible $20bn-plus merger was being explored by NAND flash-memory partners Western Digital (owner of SanDisk) and Kioxia (formerly Toshiba’s Memory Division).

However, GlobalFoundries and Kioxia are now believed to be moving ahead with planned initial public offerings (IPOs) of stock in 4Q21.

According to the McClean report the acquisitions that have taken place over the years to date have been primarily driven by industry consolidation in a number of product and manufacturing segments as well as IC companies looking to increase their presence in strong end-use applications, in particular in industrial Internet of Things (IoT), robotics, self-driving vehicles and driver-assist automation, artificial intelligence (AI) and machine-learning capabilities, image recognition, and new high-speed wireless connections to embedded systems, including the build-out of 5G cellular networks.