Four large agreements prop-up 2022 semiconductor M&A total

So far this year, four large agreements have been announced – each valued between $1.9bn and $9.4bn, pushing the combined 1H22 M&A total to $20.6bn, said the 3Q Update report.

The total value of semiconductor acquisition agreements in 2022 appears to be on pace to surpass 2021’s full-year M&A value of $22.7bn.

However, unless significantly more M&A deals are struck in the remainder of 2022, this year’s total value will probably fall below the recent annual norm of about $29bn (+/- $2bn), excluding 2020, when acquisition agreements hit a record-high $117.9bn.

The 2020 peak in semiconductor M&A announcements included Advanced Micro Devices’ acquisition of programmable-logic leader Xilinx for stock (initially valued at $35bn) and Nvidia’s controversial attempt to buy processor-design intellectual property (IP) supplier ARM in the U.K. from Japan’s SoftBank for $40bn in cash and stock.

Nvidia dropped its purchase of ARM in February 2022 after facing opposition by government regulators in the US, UK, and European Union over anti-trust concerns. The four largest semiconductor acquisition agreements in 1H22 accounted for essentially all of the $20.6bn in M&A value during the first half of this year, the update said.  Several other smaller semiconductor acquisition agreements were struck in 1H22, but these deals had values under $25m. Note: IC Insights’ M&A list covers purchases of semiconductor companies, business units, product lines, wafer fabs, and ownership of chip IP, but it excludes acquisitions of software and system-level businesses by IC companies.

IC Insights’ list also excludes purchases of semiconductor capital equipment suppliers, material producers, chip packaging and testing companies, and design-automation software firms. Topping the M&A deals in 1H22 was an agreement by a Chinese investment consortium to take over bankrupt semiconductor conglomerate, Tsinghua Unigroup.

The financially troubled company was buried in debt after a decade of acquiring and building up its semiconductor holdings as part of an effort to make China self-sufficient in a number of chip segments and a leading global IC supplier.

In April 2022, government-backed Beijing Jianguang Asset Management Co. (JAC Capital) led a group of investment firms to complete a $9.4bn injection of payments into Tsinghua Unigroup, which runs Yangtze Memory Technologies – China’s first and leading domestic maker of NAND flash memory ICs.

In comparison, the first-half 2021 total value of M&A agreements for semiconductor companies, assets, product lines, and related business operations totaled $18.2bn, including four that were announced with price tags between $1.4bn and $7.1bn.

In the last six months of 2021, the combined value of semiconductor M&A deals was $4.4bn – the lowest total for the second half of a year since early last decade, according to the 3Q Update.

The second largest chip acquisition agreement in 1H22 was Intel’s $5.4bn deal to buy pure-play wafer foundry Tower Semiconductor in Israel. The cash purchase, announced in February 2022, is expected to be completed by early 2023 and is part of Intel’s push into the silicon foundry business. In May 2022, California-based MaxLinear announced an agreement to buy Silicon Motion in Taiwan for $3.8bn in cash and stock.  This acquisition is expected to be completed in 1H23 and will add controller ICs for NAND flash storage to MaxLinear’s lineup of RF and mixed-signal products. AMD, in April 2022, announced a $1.9bn agreement to buy packet-processor and cloud-computing software startup Pensando Systems in Milpitas, California, to boost its presence in the data centre market and increase competition with Intel.

The acquisition of Pensando was finished in May 2022; three months after AMD completed its purchase of Xilinx in February 2022. The Xilinx acquisition became the largest semiconductor M&A deal in history because the final acquisition value climbed to $49.8bn – 42% higher than the initial $35bn estimate when the purchase was announced in October 2020 – because of the strong increase in AMD’s stock price during the last two years. Report Details:  The 2022 McClean Report

The McClean Report – A Complete Analysis and Forecast of the Semiconductor Industry, is available . A subscription to The McClean Report service includes the January Semiconductor Industry Flash Report, which provides clients with IC Insights’ initial overview and forecast of the semiconductor industry for this year through 2026.

In addition, the third of four Quarterly Updates to the report was released in August, with one additional Quarterly Update to be released in November of this year.  An individual user license to the 2022 edition of The McClean Report is available for $5,390 and a multi-user worldwide corporate license is available for $8,590.  The Internet access password and the information accessible to download will be available through November 2022. https://www.icinsights.com/services/mcclean-report/pricing-order-forms/