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Why NXP choose Freescale?.....NXP not the only one behind freescale
Descriptions
Of
the many reasons discussed for the NXP and Freescale deal, it is clear
that the future of the connected car is a prime reason for embarking on
this acquisition. The
justification for the merger is a total addressable market exceeding $26
billion back in 2013, yet no player had more than 11% of the market.
Now the combination of NXP Semi and Freescale will control 13% of the
market with the ability to grab market share
and consolidate the industry as the leader.
As
per a PwC report on Automotive industry, the automotive sector promises
to be a particularly dynamic driver of growth for the semiconductor
industry. Not only is the
semiconductor content of cars growing rapidly as they rely on greater
intelligence, connectivity and sophisticated electronics, but the nature
of the automotive industry model is also shifting in new directions.
Concepts of product ownership will give way to
service propositions to deliver mobility to consumers who will pay only
for what they use. Creating and managing the systems to deliver that
mobility will depend heavily on complex electronics.
Avago was behind Freescale, but got a cold feet......
As
per a recent Reuters report, Avago held "advanced talks" to buy
microcontroller/network processor/base station amplifier maker Freescale
before the chipmaker agreed
to a $16.7B deal with NXP. It got a cold feet after Freescale’s shares
surged last month. Avago has struck a $6.6B deal to buy LSI, a $309M deal to buy PLX
Technology and most recently, a $609M deal to buy Emulex, expanding into
a number of enterprise hardware markets on the way. In the LTM, the
chip industry has seen M&A deals worth $31B,
and it seems that the trend is going to continue as chipmakers large and
small try to reap cost and product synergies by merging with peers.
Avago
could now look at expanding in different areas, from analog
semiconductors to radio frequency technology, adding that it could roll
up several smaller analog companies
or pursue a larger acquisition. Avago's main business is its wireless
segment, which last quarter accounted for about 40 percent of revenue
and sells radio frequency chips for products like Apple's Inc's iPhone.
The rest of its businesses are split between
enterprise storage, wired infrastructure and fiber optics, as well as
industrials, all areas it may seek to bulk up.
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