Nvidia, AMD and Intel are leading an unprecedented $100 billion wave of acquisitions as the cloud and AI change the chip market: ‘The biggest year for consolidation ever; (INTC, AMD, NVDA)

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Big merger deals, once rare in the semiconductor industry, have been accelerating as chip giants jockey for position in a rapidly shifting market. 

And the buying spree has picked up steam in the last few months with back-to-back deals worth $100 billion in total.

Over the past few years, major chip makers, led by Nvidia, AMD and Intel, have been on a buying spree, gobbling up or making bold, even surprising, bids for companies, including startups and longtime industry players.  

“The semiconductor industry has been on fire this year,” Charles Wuischpard, CEO of chip startup Ayar Labs, which just raised $35 million in venture capital funding, told Business Insider. “Lots of transactions.” 

Bernstein Research analyst Stacy Rasgon said the M&A wave started around 2014-2015. But “this would be the biggest year for consolidation,” he told Business Insider.

The big chip M&A deals over the past seven months include:

In April, Nvidia acquired networking chip and equipment maker Mellanox for $7 billion.
In July, Analog Devices, the maker of analog chips, announced it was buying rival Maxim for $21 billion.
In September, Nvidia said it had signed a $40 billion deal to buy chip design powerhouse Arm from Softbank
In October, AMD unveiled a $35 billion deal to acquire programmable chipmaker Xilinx.
Later that same month, Marvell announced a deal to buy networking chip company Inphi for $10.6 billion.

The M&A wave, together with a rise of semiconductor startups, highlights the growing need for new and more powerful processors for new technologies, led by the cloud and AI.

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The rash of acquisitions also underline the chip industry’s rapid growth over the past decade, from a market worth less than $300 billion to one now worth more than $400 billion, said IDC analyst Mario Morales.

“You’re getting to a point where it’s a very large industry, and the growth is beginning to mature,” he told Business Insider. “You start seeing a lot more companies trying to get bigger and the only way they do that is through consolidation because that’s the only way they can continue growing their top line revenue.”

Gerard Williams, CEO and cofounder of chip design startup Nuvia, and an Apple veteran who helped design the iPhone processor, said those big M&A moves also highlight the shift in the chip market that threatens Intel, the world’s biggest chip company.

AMD’s “acquisition of Xilinx represents a huge bet on the future of their data center business and underscores the M&A frenzy taking hold in the chip sector right now,” he told Business Insider. “Nvidia’s bid to buy ARM is an even bolder move to re-shape the silicon landscape and further displace Intel’s core business.”

Nvidia is the most aggressive acquirer

The most aggressive acquirer, by far, has been Nvidia. The graphics chip maker which has emerged as a major player in the market for data center chips and AI technologies that require more powerful processors for handling massive amounts of data. 

Morales said Nvidia’s bid for Mellanox, which is expected to boost its position in the data center market, was …read more

Source:: Businessinsider – Tech

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