Analog/Mixed Signal

Semiconductor Wi-Fi chip market experiences acquistions, power grabs - with more likely

18 July 2019
While four major Wi-Fi deals have been made so far in 2019, more are likely to come. Source: Pixabay

Since January, there has been an explosion of acquisitions in the semiconductor wireless connectivity market, specifically in the realm of Wi-Fi.

Large corporations are paying billions to acquire wireless connectivity chips to strengthen their connectivity portfolios and widen platforms across the internet of things (IoT), automotive and industrial markets.

According to Phil Sealy, research director at ABI Research, there are four reasons for the mega acquisitions.

  • The semiconductor market is being squeezed by continued average selling price degradation.
  • Growth through acquisitions not only broadens portfolios, but also gives value to existing markets via harmonizing technologies.
  • Connectivity and security are now being considered highly complementary, so having a combination use case for semiconductors is an intriguing and profitable enterprise.
  • Capturing new emerging areas is always a target for acquisitions.

“In many ways Wi-Fi connectivity was a key missing piece of the puzzle when it comes to targeting the IoT, automotive and industrial segments,” Sealy said. “Several of these companies have existing strengths within these markets, and these acquisitions will allow them to better target them in the future. These acquisitions should also improve time to market and help to scale some of these opportunities across these 3 key growth environments.”

There have been four major wireless connectivity acquisitions this year alone. In March, Dialog Semiconductor acquired the mobile communications product line from Silicon Motion. The deal would expand Dialog’s IoT portfolio to include ultra-low-power, Wi-Fi system-on-chips and modules as well as mobile chips for consumer segments.

In May, NXP acquired Marvell for $1.76 billion, giving NXP a range of wireless connectivity options for Wi-Fi 4, 5, 6 and Bluetooth and Bluetooth low energy (BLE) combination devices. NXP said it plans to use these chips with combined solutions for use in IoT, automotive, industrial and communications infrastructure markets.

In June, On Semiconductor completed its acquisition of Quantenna to expand its portfolio for advanced connectivity applications in industrial, automotive and carrier markets.

Also in June, Infineon agreed to acquire Cypress Semiconductor for $10 billion to help accelerate Infineon’s entry into new IoT applications for both industrial and consumer segments. This includes Wi-Fi and other connectivity chips that will help the company to create combination chips to tackle new markets.

These Wi-Fi acquisitions may just be the beginning of the buying spree set to happen with a high possibility of further deals happening this year, Sealy said.

“I think the overall message is clear, in the fact that chipset vendors are looking to draw further value out of markets they are already well established within, whilst looking towards the next-generation growth opportunity related to automotive, industrial and IoT,” Sealy said.

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