Semiconductor Mergers and Potential Mergers in 2015-6 (latest Broadcom buys Brocade and potentially Skyworks buying Microsemi)

Semiconductor industry continues to consolidate. Last month Qualcomm offered to buy NXP and this month Broadcom is buying Brocade Communications for $5.5 Billion. It also appears that Skyworks Solution is in talks to acquire Microemi .

See below a table summarizing all these deals and the potential deals.

Ron

Insightful, timely, and accurate semiconductor consulting.

Semiconductor information and news at - http://www.maltiel-consulting.com/

NXP/Freescale	March 2015	$ 12 Billion	NXP to buy Freescale, create $40 billion company
Cypress Semiconductor/ Spansion	March 2015	$ 5 Billion	Cypress and Spansion merge in $5B deal
NXP RF/ Jianguang Asset Management	May 2015	$ 1.8 Billion	Why NXP is selling its RF power business for $1.8 billion
Avago/Broadcom	May 2015	$ 36.7 Billion	Avago Agrees to Buy Broadcom for $37 Billion
Intel/ Altera	June 2015	$16.7 Billion	Intel Agrees to Buy Altera for $16.7 Billion
Microchip/ Micrel	Aug 2015	$0.8 Billion	Microchip Technology Completes Acquisition of Micrel
LAM/ KLA-Tencor	Oct2015	$10.6 Billion	Lam to Buy KLA-Tencor in $10.6 Billion Chip Machinery Deal
Western Digital/ SanDisk	Oct2015	$19 Billion	Tsinghua Unigroup to Adjust Its Approach to Get NAND Flash
Texas Instruments, Analog Devices, ? /Maxim	Oct2015	$9+ Billion	Texas Instruments Said in Talks to Acquire Maxim Integrated
Microsemi/ PMC-Sierra	Nov 2015	$2.5 Billion	Microsemi to Buy PMC-Sierra In Deal Valued at About $2.5 Billion
On Semiconductor or China Resources  / Fairchild Semiconductor	Dec 2015	$2.5 Billion	China Resources challenges ON Semiconductor with Fairchild bid
Dialog/ Microchip Technology / Atmel	Jan 2016	$3.6 Billion	Microchip Technology to Buy Atmel for Nearly $3.6 Billion
Cavium Buys QLogic (Storage, Networking Merger)	June 206	$1 Billion	Cavium Buys QLogic (Storage, Networking Merger)
SoftBank wants to purchase of ARM	July 2016	$32 Billions	How ARM set itself up for a $32 billion acquisition
Qualcomm buy NXP	Oct 2016	38.5 Billions	Qualcomm to Acquire NXP Semiconductors for $38.5 Billion
Broadcom to Buy Brocade Communications	Nov 2016	$5.5 Billion	Broadcom to Buy Brocade Communications for $5.5 Billion
Skyworks in talks to buy Microsemi	Nov 2016		Skyworks in talks to buy Microsemi

Cavium Buys QLogic (Storage, Networking Merger)

Another semiconductor merger

"Cavium Inc. will take on Broadcom, Intel and Mellanox in storage and networking with its billion-dollar acquisition of Qlogic Corp. The deal teams one of the semiconductor’s fastest growing companies with one just starting to emerge from a decline.

The acquisition adds Qlogic’s Fibre Channel and Ethernet controllers and boards to Cavium’s line up of communications, security and general-purpose processors, positioning Cavium as more of a full-line supplier to data centers. "

Other developments in networking chips-  Stanford Professor’s Startup Plans Novel Networking Chips.

Additional information on recent semiconductor mergers and acquisitions and China efforts- Update:China 2015/2016 Semiconductor Mergers, Acquisitions

Ron

Insightful, timely, and accurate semiconductor consulting.

Semiconductor information and news at - http://www.maltiel-consulting.com/

Cavium Buys QLogic for $1B

Deal expands vendor of data center chips

Rick Merritt

6/15/2016 07:15 PM EDT 

SAN JOSE, Calif. – Cavium Inc. will take on Broadcom, Intel and Mellanox in storage and networking with its billion-dollar acquisition of Qlogic Corp. The deal teams one of the semiconductor’s fastest growing companies with one just starting to emerge from a decline.
The acquisition adds Qlogic’s Fibre Channel and Ethernet controllers and boards to Cavium’s line up of communications, security and general-purpose processors, positioning Cavium as more of a full-line supplier to data centers. The deal also gives Cavium a mature software stack in storage and networking and operational savings expected to amount to $45 million a year by the end of 2017.
Both companies sell to server makers and large data centers with a customer overlap of more than 60%. Qlogic’s customer base is highly concentrated with nearly 60% of its business for the last several years to three top server makers -- HP, Dell and IBM.

Cavium and Qlogic share more than 60% of their customers in common. (Image: Cavium)

Cavium will pay approximately $15.50 per share for Qlogic, $11 per share in cash and the rest in stock. Cavium will take on $750 million in debt to pay for the deal. The boards of both companies have approved the deal.
“In our view, this deal is all about company scale,” said Bob Wheeler, principal networking analyst at market watcher The Linley Group (Mountain View, Calif.). “It essentially doubles Cavium’s revenue and eliminates the redundancies of operating two public companies, [but] there is little overlap in products and customers, so there’s not much room for reducing R&D and other costs,” Wheeler said.
Qlogic rebounded slightly in its last fiscal year ending in May after reporting sagging results for several years. Annual revenues fell from $558 million in 2011 to a low of $460 million in 2014, then stepping up to $520 million last year. Profits tumbled from $140 million in 2011 to a loss of 18 million in 2014, recovering to a $50 million profit last year.

Cavium said Qlogic has 782 employees today. However, it reported 927 employees in its annual report in May. Cavium expects to add $400 million a year to its top line from the deal, suggesting it may cut Qlogic’s systems-level business in Fiber Channel switches.

“There’s a lot of cross pollination of IP and new products in storage and server that combine the two companies’ IPs,” said Cavium’s chief executive, Syed B. Ali in a call with financial analysts.
“The [Qlogic storage and networking] software is as, if not more important because it runs on all major operating systems and the major versions of them -- this is a huge task,” Ali said. “It would have taken us 5-7 years to have a mature stack, but this will now be available on Cavium products,” he added.
Cavium aims to pump Qlogic’s business, now growing at 8%, to 10% growth with the overall company targeting growth well into double digits. “This will be among the highest growing semiconductor companies in the world,” Ali said.
Depending on the area, it will take six to 12 months for Cavium to start winning new sockets based on synergies between the companies. Qlogic has more than $300 in cash on hand and will expand Cavium’s cash flow, funds that will be used in part to help pay down debt.
“The scale of operations of a nearly $1 billion revenue business will allow the combined company to deliver better solutions for customers and create more career opportunities for employees,” said Christine King, executive chairman of QLogic, speaking in a press statement.
— Rick Merritt, Silicon Valley Bureau Chief, EE Times