Acquisition fever?

1 min read

There is nothing new in companies buying other companies; it's been going on since the concept of business was first developed. And there has been a rash of acquistions of late in the electronics industry. In March, NXP announced its merger – an acquisition in all but name – with Freescale. Microchip is buying Micrel, Cypress has acquired Spansion and is trying to do deal to buy ISSI. Distributor Arrow Electronics has made a couple of deals and is expected to make further moves shortly. ARM has bought a couple of companies. And so it goes on.

Why these acquisitions take place is an interesting question. At its most brutal, acquisition of a competitor boosts market share at a stroke. But most of the recent electronics deals seem to have been done for other reasons; mainly to broaden portfolios.

Despite being big players, NXP and Freescale's technology doesn't overlap too much. But they have one thing in common: they target the automotive sector. Cypress and Spansion, meanwhile, have complementary memory technologies. Microchip says Micrel's technology will complement its initiatives in a range of markets.

When I wrote this a week or so back as the comment for New Electronics' Products in Focus supplement, I said 'one thing is certain: 'acquisition fever' will continue'.

I noted the rumours linking Intel and Altera continued to circulate and that Avago was being tipped as likely to close a deal in the near future. Now, Avago has made that deal – a $37billion blockbuster to acquire Broadcom.

While there is undoubtedly a long tail of suppliers in the electronics industry, these acquisitions are reducing the number of companies who hold the lion's share of the market.

So what about the customer? While such deals might streamline the purchasing process and cut overheads at the merged companies, what is the impact on design engineers?

On one hand, a merged company becomes more of a 'one stop shop'; if you're designing automotive electronics, NXP, for example, might now have everything you need. On the other hand, are you sure that dealing with one company is a good thing?

It's a good time to be a shareholder, by the look of it, but are these moves good for engineers?