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Dialog Semiconductor to acquire Creative Chips

Dialog Semiconductor is to acquire Creative Chips, a prominent supplier of Integrated Circuits (ICs) to the Industrial Internet of Things (IIoT) market.

Based in Bingen close to Frankfurt, with an additional design center in Dresden, Creative Chips is a fabless semiconductor company with a growing IC business supplying a broad portfolio of industrial Ethernet and other mixed-signal products to top-tier, blue-chip manufacturers of industrial and building automation systems.

The technology is optimised to efficiently connect large numbers of IIoT sensors to industrial networks. Building on its long-established custom IC business, Creative Chips is also developing a range of highly complementary standard IO-Link IC products, driving broader connectivity in the Industry 4.0 revolution.

The new acquisition is strategic for Dialog to establish itself as a proven supplier, well-positioned to capture the significant growth potential of the Industrial IoT market. It also provides Dialog with a rich portfolio of core IC products and a broad library of relevant analog, digital and RF technologies. The acquisition includes the addition of an experienced engineering team with a wealth of unique skills that, when combined with Dialog’s worldwide engineering, marketing and sales teams, will accelerate IC sales on a global basis.

Both companies operate established fabless semiconductor business models with a focus on mixed-signal products and technology. With Dialog’s global scale, operations, product development and extensive IC technology resources, the combined companies are strongly positioned to quickly address opportunities in the IIoT market.

Commenting Jalai Bagherli, CEO of Dialog, said that the acquisition would give Dialog a "strong foothold in the Industrial IIoT market." Adding, " It would further diversify Dialog’s product revenues, customer base and end markets by extending our reach in the industrial sector in addition to strengthening our automotive offering."

With Creative Chips, Dialog gains a set of top-tier industrial customers with trusted relationships that have been built over the course of nearly 20 years. This will extend Dialog’s global sales reach of its existing wireless low power connectivity, configurable mixed-signal and power management ICs while establishing a key strategic building block for Dialogt.

Creative Chips is expected to generate revenues of approximately $20 million in calendar year 2019 with revenue growth of over 25% per annum anticipated over the next few years.

The acquisition will be funded from Dialog’s balance sheet for a cash payment of approximately $80 million, with an additional contingent consideration of up to $23 million, based on future revenue targets in 2020 and 2021.

Author
Neil Tyler

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