Media Coverage
Source: Daily Journal
Media Coverage
06.11.15
Highlighting the vigorous state of deal activity in the semiconductor market, Intel Corp. just acquired San Jose-based Altera Corp for $16.7 billion in cash. So far this year, the semiconductor market has witnessed nearly $74 billion in merger and acquisition activity, compared to roughly $24 billion last year. These deals are emblematic of an aging and shrinking U.S. industry driven by the need for product expansion and growth of market share, where the smaller companies easily fall pretty to larger ones. Activist investors eager to promote deals have found the industry an attractive one, adding to the pressure to consolidate.
"The small- to mid-cap semiconductor space has been consolidating at a fairly fast rate - perhaps under the radar - for a couple of years," said Emerging Growth & Venture Capital partner Jorge A. del Calvo. "Now it appears to be moving up the stack." Supply and demand is also fueling the process, he said. The number of companies in the chipmaking arena is shrinking, boosting the value of the existing players as a result. This increase in dealmaking parallels a steady slowdown in venture capital funding and a drop in semiconductor IPs, two factors del Calvo said contribute to disruption in the market. “Why is there so little money going into this market and why are so few companies being created?” he said. “The opportunity for deals is great because the number of companies is shrinking. It’s becoming a situation of supply and demand.”