German chip company Infineon Technologies AG (Munich, Germany) could soon close a deal for a $2bn acquisition of a U.S. semiconductor company, according to a Bloomberg report that referenced unnamed sources.
Bloomberg said the deal could be announced later today but could also fail to materialize but added that potential targets could include Fairchild Semiconductor International Inc., Power Integrations Inc. and Semtech Corp. These have market capitalizations in about the right range and match an interest Infineon has to increase the size of its power semiconductor business.
Power management ICs, used in applications from washing machines, through industrial control and within mobile consumer applications is a particular chip sector that Infineon wants to scale up, according to financial analysts quoted by Bloomberg.
Reuters raised the possibilities of Diodes Inc. and International Rectifier Corp. as targets. Fairchild's market cap stands at about $2.0 billion and Power Integrations and Semtech at $1.9 billion and $1.7 billion, respectively.
The deal would be part of significant round of mergers and acquisitions that has been happening in 2013 and 2014. Examples are the larger end of the spectrum include Applied Materials $29 billion merger with Tokyo Electron Ltd. to form Eteris; Avago's $6.6 billion deal to acquire LSI Corp.; and Intel's $650 million to buy the former LSI networking business from Avago. In June Analog Devices Inc. offered $2 billion to buy Hittite Microwave Inc.
Smaller deals have been too numerous to list as the semiconductor industry embarks on a round of consolidation. Other deals have failed to materialize including IBM's reported desire to off-load its semiconductor business and a potential European mixed-signal and sensor deal between Austria's AMS AG and Dialog Semiconductor plc that collapsed in July.
Infineon, which has focused in recent years on automotive, industrial, power and security applications, has enjoyed multiple quarters of robust growth in both profits and sales revenue. Infineon CEO Reinhard Ploss was asked about why Infineon was building up a significant cash pile in the company's most recent analysts' call to discuss its financial results. Ploss said that the company was looking out for merger and acquisition opportunities, adding: "Should we not find any attractive M&A we will consider other capital repayment options."
Infineon had not responded to requests for information by the time this article was posted.
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