It is axiomatic that takeovers and mergers don't work in the semiconductor industry. But which one was the worst?
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Comments (18)
You left out ARM's $1B purchase of Aritsan Components? Or the MIPS ChipIdea fiasco?
http://danielnenni.com/2009/08/23/semiconductor-ip-companies-on-the-move-varc/
Tough call really, they all qualify as a total failure of common sense.
D.A.N.
Posted by Daniel Nenni | February 1, 2010 3:34 AM
Posted on February 1, 2010 03:34
Maybe in a few year ST-Ericsson will be in that list...
Posted by Djonne | February 1, 2010 8:50 AM
Posted on February 1, 2010 08:50
I think ARM are still saying the Artisan thing will work out, Dan but I agree the $1bn always seemed a hugely inflated price. But it still qualifies as a work-in-progress. I didn't realise ChipIdea/MIPS had turned out so badly.
Posted by David Manners
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February 1, 2010 11:10 AM
Posted on February 1, 2010 11:10
OmIGod, Djonne, I do hope not. But, I agree, it doesn't look promising. The cellphone market is not the pot of gold it once was, and ST-Ericsson seems devoid of new ideas.
Posted by David Manners
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February 1, 2010 11:16 AM
Posted on February 1, 2010 11:16
Does the Ferranti take over of International Signal & Control count? They didn't sell their semicon stuff off to Plessey for another year, to try and steady the ship. Killed a company with a pretty good record in semiconductors stone dead!
Posted by Stooriefit | February 1, 2010 3:39 PM
Posted on February 1, 2010 15:39
Hitachi and Mitsubishi to form Renesas ?
Two top companies combine to form a result smaller than either.
Posted by Mike Bryant | February 2, 2010 2:05 AM
Posted on February 2, 2010 02:05
my vote would be for AMD's takeover of ATI, it was absolutely pointless and simply cost AMD lots of cash, when they could least afford it...stupidity.
Even when they sold the ATI parts to BRCM, BRCM found out that the parts were worthless.
Posted by Robert | February 2, 2010 4:27 AM
Posted on February 2, 2010 04:27
It certainly counts as regards scale of disaster, Stooriefit, but the poll was about specifically semiconductor takeovers and Ferranti-ISC wasn't primarily a semiconductor takeover. But you're right - it killed Ferranti stone dead. Apparently ISC had an actor dressed up as a South American General to con the Ferranti guys intro believing ISC had big orders from his government! Funny if it weren't so sad.
Posted by David Manners
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February 2, 2010 11:02 AM
Posted on February 2, 2010 11:02
Yes Robert that's an good candidate, but I thought the CPU/GPU combination coming out of the AMD/ATI merger was going to justify the $6bn or so spent on the acquisition. Or am I whistling in the dark?
Posted by David Manners
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February 2, 2010 11:05 AM
Posted on February 2, 2010 11:05
Mike, Renesas has been more of a slow-burn, stately, degenerative decline than a big immediate disaster. It's still iNo.6 in the world (though it started off at No.2) so I think the jury's still out.
As to the European semiconductor strategy, I think you're are 100% right. It's been disastrous to see ST unable to build a single 300mm fab except Crolles - which France seems to pay for - even when ST had some enourmous sum from the EC - $600m or so - to build Catania (now passed on to Numonyx). Infineon, under Schumacher, managed to get funding for Dresden and for 300mm development, but the company's political clout seemed to wane with Schumacher's departure. As to NXP - well Kohlberg Kravis and Roberts did for NXP and the EC can't be blamed for that.
Posted by David Manners
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February 2, 2010 11:17 AM
Posted on February 2, 2010 11:17
I reckon that all the mutter we've been adding on other semicon takeover/merger disasters that didn't even make the list just goes to prove Malcolm Penn's point that Wall Street's magic recipe for semiconductor success is just snake oil.
Wouldn't it be quicker (and more uplifting) for us to point out the M&A activity that has worked?
Just have to think of some now ...
Posted by Stooriefit | February 3, 2010 4:22 PM
Posted on February 3, 2010 16:22
Well of course there's ST, Stooriefit, and then there's . . er . . .ST and then again there's ..er...um . . .ST
Posted by David Manners
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February 3, 2010 5:22 PM
Posted on February 3, 2010 17:22
Stooriefit, David
One's that have worked? There are a few.
Most of Broadcom's acquisitions.
Certainly buying Element 14 to get into DSL worked well, and I think most of the others seem pretty good too. Certainly they could never have got into so many markets or grown so much by organic growth.
TI success in analog - how much of that is due to Burr-Brown?
Or, further back, ADI buying PMI?
Thorn acquring Inmos was pretty irrelevant - but the ST acquisition perhaps worked out?
But no, not many.
Posted by El Rupester | February 5, 2010 9:20 PM
Posted on February 5, 2010 21:20
Well El Rupester, I've heard Scott mcGregor say about half Broadcom's acquisiitons have destroyed value and Element 14 was bought not only pre-revenue but pre-silicon, as I recall and are you sayingb the $600m puirchase price couldn't have been put to better use in developing DSL internally? Or even hiring away the Element 14 designers? $600m seems a lot for a few designs and designers however good the desgners are (and they're good). TI/Burr-Brown I grant you -was a success. Can't remeber the effect of ADI/PMI. Torn-Inmos - I would have said was a total disater - Thorn did not have a clue what they were buying, they did it just to suck up to the government.
Posted by David Manners
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February 6, 2010 3:06 PM
Posted on February 6, 2010 15:06
WOW...TI / BB successful? I think you guys have had enough koolaid!
At the time of the takeover BB had about $300M revenue, of this $150M was low margin Audio Codecs in Japan. So the total differentiated product revenue was about $150M , this made BB's analog substantially smaller than TI's internal analog effort. For this TI paid $7B that's right $7000M.
Of course this all neglects the biggest negative for TI, namely that TI inherited Syrus Madavi aka "Syrus the virus"
Posted by Robert | February 7, 2010 7:24 AM
Posted on February 7, 2010 07:24
Thanks Robert, that's very interesting
Posted by David Manners
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February 7, 2010 10:32 AM
Posted on February 7, 2010 10:32
Howzabout Freescale buying SigmaTel for their analog and mixed signal expertise, then one year later firing all the people including some of the best analog/mixed signal people in Austin? Oh, and before they bought the company, not realizing that two *key* people were not going to stay after the merger, and not locking those two fellows down?
But then again, *most* Motorola acquisitions in the 1990's didn't pan out, either ... sadly.
I dunno, I think the biggest mistake of most semiconductor companies is spending beaucoup money on design and production, and hardly any money at all on good software people. Outsourcing to India does not constitute an effective software strategy, except if you're the CFO and get rewarded for being cheap *and* short-sighted. But that's another thread.
Posted by Alan R. Weiss | March 9, 2010 6:35 PM
Posted on March 9, 2010 18:35
Yes, Alan, good point, I think it shows that many top managements don't know what's going on in their own companies, let alone what goes on in other companies.
Posted by David Manners
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March 10, 2010 2:34 PM
Posted on March 10, 2010 14:34