It's not often you see a semiconductor industry forecast come true, and particularly unusual to see one come true as quickly as Xilinx CEO Wim Roelandt's forecast following the private equity takeover of NXP.
"They (PE funds) buy a company, leverage the hell out of it, sell bits and pieces, cut the R&D spending and go public to get their money back," said Roelandts last November.
Now NXP Semiconductors has sold its cordless and voice over IP phone chip business to DSP Group in a deal valued at $345m.
"This transaction illustrates the tremendous strategic benefit of industry consolidation to create market leaders," says one of NXP's PE backers, Egon Durban of Silver Lake.
Pull the other one Egon. Apart from ST, consolidation hardly ever created a market leader in the chip business.
So, Roelandts was right on the point that PE would sell off bit and pieces. That process has already started.
Was he also right on R&D? You betcha. Within a few months of the PE guys moving in, NXP was pulled out of Europe's foremost R&D consortium, Crolles2, triggering its collapse within six months.
And as for Roelandts' prediction of the PE guys 'leveraging the hell' out of acquisitions, well, shortly after the takeover, NXP's PE owners sold bonds worth Euros 4.5bn secured on NXP's assets and earnings to help pay towards the cost of the purchase. That's a debt which is now being borne by NXP.
So it was a good forecast, Wim, pretty well 100 per cent accurate so far.
TOMORROW MORNING; TEN THINGS THAT SHOULD HAVE MADE IT
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