Some analysts believe the outbreak could slow the growth of China's semiconductor industry to some extent, potentially delaying existing production and sales plans for many manufacturers, which could slow the pace of mergers and acquisitions by Chinese manufacturers. However, the outbreak is also likely to make it difficult for smes to raise funds for some time to come, which could fuel another wave of mergers and acquisitions among smes.
On February 6, IC Insights, an integrated circuit industry analyst, released a research report showing that semiconductor m&a activity recovered in 2019, with a total increase of 22 percent year on year to $31.7 billion. 2019 was also the third-largest year in the industry's history for mergers and acquisitions.
The semiconductor m&a boom peaked at $107.7bn in 2015. However, in the following three years, the total number of mergers and acquisitions continued to decline, showing a slowing trend. But in 2019, when the global semiconductor market was slightly weaker, there were more than 30 deals in the industry, with seven worth more than $1bn.
According to the analysis, 5G, AI, automotive and other emerging areas have successively achieved commercial mass production, making them the most important driving force for industrial development, which not only creates high growth market demand, but also facilitates the gradual recovery of mergers and acquisitions in the semiconductor sector.
However, trade relations are adding uncertainty to m&a activity in the market, which could indirectly affect the planning intentions or options for mergers and acquisitions. For Chinese semiconductor makers, their outbound acquisitions may face some difficulties in the approval process.
In addition, the recent outbreak of a novel coronavirus has also put a twist on m&a activity among Chinese semiconductor manufacturers. Some analysts believe this could slow the growth of China's semiconductor industry to some extent, with many existing production and sales plans facing delays, which could slow the pace of mergers and acquisitions by Chinese manufacturers. However, the outbreak is also likely to make it difficult for smes to raise funds for some time to come, which could fuel another wave of mergers and acquisitions among smes.
Consolidation in the global semiconductor industry has accelerated
Over the past decade, with machine learning, artificial intelligence, automatic driving, biological information recognition, computer vision, virtual/ar, high-speed wireless network and Internet of things, a series of new technology gradually rise, as the foundation of the semiconductor industry in the increasingly mature at the same time, the integration trend is gradually revealed。
众购彩票登陆Core research chief analyst gu wenjun in an interview with the 21st century business reporter pointed out that overall, the international mergers and acquisitions continue. This is mainly because the industry has entered an era of "diversification", with fewer and fewer "killer" products, and large semiconductor companies need to improve their performance through financial means or product combinations.
In terms of the size of the year, 2015 was a watershed year. In 2015 and 2016, global semiconductor m&a reached $107.7bn and $100.7bn respectively (later adjusted to $59.8bn). The global semiconductor market was worth just $12.6bn a year between 2010 and 2014. Many analysts at the time bluntly said that the semiconductor industry is going through a period of intense consolidation.
Although the trend slowed over the next three years, the semiconductor sector still averaged $50.6bn in m&a between 2015 and 2019. After 2015, it has become a new normal for the semiconductor industry to maintain a total m&a scale of more than $25 billion per year.
"Super merger" may be hard to reproduce
Xu shaofu, an analyst with jibang consulting, pointed out to the 21st century business herald that the development of 5G communication technology will be the most concerned topic in 2019. In addition to the continuous realization of commercial mass production, 5G's advantages of high transmission capacity and low delay also expand the related applications of AI and automotive fields, such as AI cloud computing and autonomous driving.
"5G, AI and automotive have become the most important driving forces for the semiconductor industry, creating high growth market demand, thus contributing to the gradual recovery of semiconductor industry mergers and acquisitions in 2019。" Furthermore, xu pointed out that mergers and acquisitions in 2019 are quite diversified, which reflects the industry's accelerated mastery of products and related technologies to cope with the expanding market demand。
However, the 2019 m&a figures are still subject to change, as regulatory approval is needed.
Statistical data in 2016, for example, semiconductor industry mergers and acquisitions of total amount is $100.7 billion, but the popular attention of Qualcomm, Qualcomm) $39 billion acquisition of grace of pu (NXP) deal in two years later regret "abortion", also make the final data is adjusted for $59.8 billion in 2016, nearly five years an average annual total to $58.8 billion, up from $50.6 billion.
In the 2019 deal, Infineon's $9.4 billion acquisition of Cypress, a U.S. company, is still awaiting regulatory approval, and is the biggest acquisition of the year according to IC Insights.
众购彩票登陆Gu pointed out that a major feature of the semiconductor m&a field in 2019 is the active m&a of mid-tier or second-tier companies, as well as the dominant product mix. But he also said there would be fewer "mega-mergers" in the future. "This is mainly due to the growing recognition of the importance of semiconductors, which has led to very high standards of review in many countries." "Policy restrictions will lead to fewer large mergers and acquisitions," he said.
Only three semiconductor m&a deals were blocked or terminated between 2013 and 2015 because of factors such as "government involvement" or "regulatory restrictions", according to accenture. Between 2016 and 2018, that number rose to 14. The report also notes that the larger the deal, the more likely it is to be subject to longer scrutiny.
众购彩票登陆Infineon's $9.4 billion acquisition of cyplas, for example, the largest semiconductor merger of 2019, was expected to close in late 2018 or early 2019, but is still awaiting regulatory approval.
However, Mr Gu stressed that the role of industry discipline would lead to continued m&a activity in spite of tighter regulation. Xu also said in an interview that the development trend of the semiconductor industry in the medium and long term, emerging applications and demand increase "quite predictable."
Compared with the past, the traditional growth mode of the semiconductor industry relying on existing resources and business is showing signs of fatigue in recent years. As the market matures, it has become an industry consensus that the next generation of technology will be extremely expensive to develop. It can be difficult for a company to maintain a high degree of flexibility in a diversified market to cope with changes in the industry. Mergers between companies provide a more efficient solution.
Accenture, the market consultancy, put it bluntly in a report published in January: "the traditional organic growth of the semiconductor industry is over." Accenture argues that rising research and development costs, the speed of technology iterations and the diversification of customer demand have all squeezed the time and money that used to support organic growth in semiconductor companies. Instead, leading semiconductor makers have embraced acquisitions as a new growth strategy. The result has been dramatic consolidation. According to the institute, there were 130 semiconductor companies worth more than $100m listed in the us a decade ago, compared with just 72 at the end of 2018.
众购彩票登陆The outbreak has created uncertainty in China's semiconductor market
The accenture report notes that changes in the semiconductor environment are also leading to changes in corporate strategy. Some companies intend to further expand the existing market share and customer groups; Some semiconductor companies also grow by expanding up and down the industry chain. More semiconductor companies are entering entirely new markets for products and services, albeit at the risk of doing so.
However, Chinese manufacturers have not been "integrated" into the global semiconductor industry's m&a trend。 The number of small and medium-sized enterprises in China's semiconductor sector grew rapidly at a time when international manufacturers were consolidating resources。 Previous analysis has pointed out that the merger between the giants may lead to the increase of their bargaining power over Chinese manufacturers, and may further affect the survival space of upstream materials and equipment manufacturers。
In addition, trade relations are adding uncertainty to semiconductor mergers and acquisitions, which may indirectly affect the willingness or choice of merger planning。 Xu noted that Chinese semiconductor companies may face difficulties in the approval process of overseas mergers and acquisitions, which will have an impact on China's semiconductor industry。
Under the circumstance that Chinese manufacturers have made progress in seeking for overseas products, the existence of too many enterprises of the same type also makes the industry too dispersed and difficult to realize centralized utilization of talents and technologies.
Gu wenjun pointed out that China's capital market is overvalued for special reasons, making it relatively easy for companies to raise funds before 2020. Moreover, the semiconductor industry, with government support, is at a "great opportunity" for start-ups. As a result, there are still relatively few mergers and acquisitions in China's semiconductor sector, especially those that have a material impact on the industry.
However, the "novel coronavirus" outbreak in early 2020 could bring some changes in the m&a landscape. "The 'new crown' event in 2020 May make it difficult for smes to raise funds." "There may be some small mergers and acquisitions," he said.
Xu said the recent outbreak of a "novel coronavirus" could slow the growth of China's semiconductor industry and delay existing production or sales plans for many companies, which could be an unexpected factor in slowing mergers and acquisitions by Chinese semiconductor makers。
However, he added that China's semiconductor industry, driven by its focus on semiconductors and related policies, as well as the fact that mergers and acquisitions are an effective way to quickly improve technology and market share, is expected to actively consider mergers and acquisitions in order to quickly improve its chip production capabilities, in addition to strengthening its own technology development.