Immediately after Qualcomm officially rejected Broadcom’s $130 billion acquisition offer, on the 13th of the US local time, Broadcom CEO HockTan responded that Broadcom’s acquisition proposal received positive feedback from key customers and Qualcomm shareholders. “Many shareholders have expressed hope that Qualcomm will With the willingness to start a dialogue with Broadcom on the acquisition proposal, Broadcom still strongly hopes to engage with Qualcomm's board of directors and management in a cooperative manner.â€
Broadcom had previously said that if the merger of the two links, and Qualcomm's acquisition of NXP's transactions can be successfully completed, the new company is expected to reach revenue of 51 billion US dollars in 2017, becoming the third largest semiconductor manufacturers after Intel and Samsung. According to Gartner data, the market shares of Broadcom, Qualcomm and NXP in 2016 were 3.8%, 4.5% and 2.7% respectively.
Regardless of the biggest M&A battle in the history of the technology industry, what emerges behind this trend is the integration trend of the international semiconductor industry. The market research firm StrategyAnalytics pointed out that in the past two years, the semiconductor industry is undergoing a fierce integration stage, such as Qualcomm, which itself is also in the process of acquiring NXP.
Semiconductor industry integration has become an international trend
Previously, in September 2016, KPMG conducted a questionnaire survey of 153 senior management personnel in the world's leading semiconductor manufacturers, and issued the "2017 Semiconductor Development Roadmap" on this basis. The report pointed out that mergers and acquisitions and access to a diversified market will be the top strategic priorities for semiconductor industry managers in the next three years. The phenomenon of mergers and acquisitions within the industry will continue and the purpose will be to focus more on obtaining technology through acquisitions and achieving revenue growth.
KPMG believes that on the one hand, semiconductor manufacturers hold large amounts of cash, but on the other hand, interest rates are still at a relatively low level, and thus M & A can continue to be the fastest way for semiconductor industry companies to enter new markets and obtain the required technology. “The strongest point of the executives is that the industry has entered a post-expansion phase. Industry representatives believe that the industry is at an inflection point or has entered a contraction period,†KPMG said in the report. “Many companies increasingly see M&A as The only way to achieve revenue growth."
According to 21st Century Business Herald reporter, Senior Director and Senior Analyst LenJelinek of the semiconductor industry at IHS Markit told reporters in the 21st Century Business Herald that the semiconductor companies can achieve (through) profit reduction through technology mergers and acquisitions to further increase long-term market share. The acquisition attempt is another example that semiconductor companies are aware of. “As the market matures, the R&D of next-generation technologies will be extremely expensive, and this is basically a consensus. It is very difficult for a company to maintain a high degree of flexibility in a diversified market to cope with industrial changes. "Jelinek said," The merger between companies can enable market specifications to be established more quickly, resulting in more efficient solutions."
According to data provided by IHS Markit to 21st Century Business Herald reporters, since 2002, the number of corporate M&A activities in the semiconductor industry had reached 22 in 2010, and gradually decreased to 9 in 2013. However, since then, M&A activities have occurred again frequently, reaching 19, 25 and 21 in the subsequent three years respectively.
In response, Jelinek said, "As a result of the valuation of the company's stock, the overall M & A activity is likely to be reduced, but the company is still more likely to sell some non-core or longer-term strategic direction of the business sector "Data show that in 2016, semiconductor companies sold 12 business units, which is equal to the total of three years from 2013 to 2015. KPMG analyzed that compared with the initial stage of this round of industry consolidation, the target of mergers and acquisitions is now less and less, and thus the actual number of transactions will decline, but the total amount of M&A transactions may still increase year by year.
For anti-monopoly needs, some semiconductor companies will also choose to spin off part of the business during the merger and acquisition process. StrategyAnalytics director of wireless component analysis Christopher Taylor told the 21st Century Business Herald reporter that taking the case of the dual-pass merger, for example, if the merger, the new company's market share in the Wi-Fi chip market will exceed 50% and trigger antitrust concerns, both of which One is likely to be forced to sell the relevant assets and patents of the production line. In 2015, during the acquisition of Freescale, NXP had also been forced to sell its RF power business unit due to its combined market share of 75%. The buyer is a Chinese-owned enterprise.
In addition, the integration trend of the semiconductor industry is likely to further develop in depth. Broadcom CEOOHockTan has previously stated that the future integration of M&A in the semiconductor industry will move from horizontal M&A among semiconductor companies to vertical integration of upstream and downstream. Guo Gaohang, an analyst at Tiebang Industry Research Institute under the state-level consultancy, also explained to the 21st Century Business Herald reporter: Some companies in the forefront may have technologies that cannot be supported by other companies in some specific industrial sectors. . Take Taiwan Semiconductor Manufacturing Co. as an example, because its foundry walks in the forefront of the industry, but many manufacturers of packaging and testing terminal can not quickly respond to its product system, TSMC also has its own needs to do package testing.
The two poles of impact: challenges and opportunities
Guo Gaohang’s interview with the 21st Century Business Herald pointed out that the merger between giants will inevitably lead to an increase in the bargaining power of Chinese manufacturers, and the weakening of bargaining power of local OEMs and manufacturers of packaging and testing will likely further affect the survival of upstream materials and equipment manufacturers. space.
Taking double-pass as an example, Gu Wenjun, chief analyst of the core research, told the 21st Century Business Herald reporter that most of Broadcom’s acquisitions are financial operations and need to rely on post-merger price increases to ease capital pressure. "According to Broadcom's operating history, after each acquisition, it will raise prices in the core and monopolistic products," said Gu Wenjun.
The previous report of the 21st Century Business Herald also mentioned that as early as when Anglo-Gold merged with Broadcom, New Broadcom conducted a round of product price increases for customers including Huawei and ZTE, and the lowest product growth rate was up to 10%. %. The survival space of domestic agents has also been severely squeezed.
In addition, while the international semiconductor industry is showing a trend of concentrated resource integration, China has seen a large-scale increase in the number of companies in 2016. Guo Gaohang pointed out that the current international giants are still mergers and acquisitions integration, Chinese manufacturers in the case of difficult progress in the external purchase, the existence of too many types of companies makes the industry too dispersed, it is difficult to achieve the concentrated use of talent and technology.
However, the integration trend of the international semiconductor industry is not all a "disaster" for Chinese manufacturers.
Jelinek believes that although mergers and acquisitions between companies are not as popular in China’s semiconductor industry as compared with global industry integration trends, it’s currently unclear that they want to judge that Broadcom’s acquisition of Qualcomm and the industry integration trends behind it have a long-term impact on China. : "China is committed to developing a unique set of Chinese standards with the goal of developing local solutions that do not rely on international industry standards."
Guo Gaohang believes that in the semiconductor industry, it is possible for a giant to gain leadership in several product areas. However, even in giant core products or branch products, even giants will need cooperation from other companies. Taking technology giant Apple as an example, its core product iPhone's OLED screen still needs Samsung or China's BOE to provide it. "We can't stop the Big Mac, but the market is completely controlled by the Big Mac."
Gu Wenjun thinks that this trend actually shows the lack of growth of the international giants. This will be an opportunity for Chinese companies. On the one hand, the industry has reached a bottleneck period. In recent years, there have been few breakthrough products. Through financial operations, it has become a choice to enhance profits. However, on the other hand, there are some new types of things such as Internet of Things, AI, AR, and VR. A very fragmented application emerged. "Although the semiconductor industry is in a phase of change, the overall industry's vitality is still very strong."
Taylor pointed out that mergers and acquisitions between giants have another potential positive impact on Chinese manufacturers: the merger of dual-links will strengthen their cooperation with China's semiconductor industry. "Qualcomm already has a large number of products under the responsibility of China's foundries, and has also reached several cooperation programs with Chinese manufacturers as its core, such as joint ventures with ChinaLearning, Huaxintong joint ventures, and in the 5G field and China network. Cooperation between operators and venture capital funds. Since reaching an agreement with the China Development and Reform Commission, Qualcomm's business in China has progressed smoothly, and this trend is very likely to continue.†Taylor said.
Transformer For Renewable Energy
Transformer For Renewable Energy, Solar Transformer,Wind Mill Transformer, Energy Station
Hangzhou Qiantang River Electric Group Co., Ltd.(QRE) , https://www.qretransformer.com