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Making an offer for another company is one thing; completing the deal is another

“We have created an industry powerhouse.” Rick Clemmer, CEO of NXP

Intel and NXP have completed their respective acquisitions of Altera and Freescale, deals which see two long standing and well known electronics names effectively disappearing.

The acquisition of Altera by Intel was announced in June 2015, following a period of ‘will they, won’t they?’ speculation. Rumours first started circulating in March 2015, when the FPGA developer was said to have received a $10billion offer. In the end, Intel paid $16.7bn, with industry watchers not only questioning what the processor giant saw in Altera, but also the amount it paid.

Intel, however, is bullish about the deal, claiming access to Altera’s technology will enable ‘new classes of product in the data centre and IoT sectors’. “Together,” said Intel’s CEO Brian Krzanich, “we will apply Moore’s Law to grow today’s FPGA business and invent new products that make amazing experiences of the future possible.” These products will be targeted at applications such as autonomous driving and machine learning, as well as data centres and IoT.

Altera will now operate as Intel’s Programmable Solutions Group (PSG) and maintain ‘business as usual’. In a statement, Intel said it intends to fully support and grow Altera’s FPGA business and to support the entire product line, including those based on ARM technology.

Devices will continue to be made at TSMC, with the exception of Stratix 10 parts, where an agreement had already been reached on the use of Intel’s 14nm process technology.

The first indication of where Altera’s technology may play a role in future Intel products could come later this year. According to Intel, it plans to integrate a Xeon processor and what it calls a ‘coherently attached’ FPGA – a combination expected to bring a ‘significant’ performance boost to data centre operations.

Dan McNamara, previously general manager of Altera’s embedded division, will be general manager of PSG, reporting directly to Krzanich.

Meanwhile, NXP’s acquisition of Freescale closed on 7 December 2015. The deal valued the latter at $11.8bn.

Where Intel appeared to be more interested in Altera’s technology, NXP was looking squarely at market opportunities when it made the offer for Freescale – while there was little overlap between the two companies’ portfolios, they both had security and automotive as target markets.

Bringing the two companies together has created the fourth largest semiconductor business, excluding memory companies.

CEO Rick Clemmer was enthusiastic as the deal concluded. “We have created an industry powerhouse focused on the high growth opportunities in the ‘smarter world’.

“[The] formation of the new NXP is a transformative step on our journey to become the industry leader in high performance mixed signal solutions.”

NXP will have five business units: security and connectivity; automotive; RF; standard products; and digital networking. Steve Owen, executive VP of global sales and marketing, noted: “It’s exciting times for all of us and a time for more innovation and smarter thinking. The deal brings together two fantastic semiconductor companies and our customers are looking to us to innovate.” He added the new company has a ‘significant’ engineering presence – some 11,000 engineers around the world – and it would continue to work with the same ambition, but with a broader portfolio of products.

The one blockbuster deal from 2015 still to close is Avago’s $37bn acquisition of Broadcom. When the proposed deal was announced at the end of May 2015, Avago said it expected it to complete by the end of Q1 2016.

Industry watchers are now wondering whether the more than $100bn spent on electronics acquisitions in 2015 was a blip or, if not, which company is next?

Author
Graham Pitcher

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