NEW YORK • Advanced Micro Devices' (AMD) US$35 billion (S$47.8 billion) purchase of rival semiconductor maker Xilinx pushes 2020 towards a record year for chip deals, as large tech companies rush to consolidate the increasingly competitive industry.
There have now been US$110 billion of deals announced in the semiconductor industry this year, led by Nvidia's US$40 billion bid for chip designer Arm, according to data compiled by Bloomberg.
The Xilinx deal makes 2020 the biggest year at this point on record for pending and completed deals involving semiconductors, the data shows.
The high-water mark for semiconductor deals was reached in 2016, when US$122 billion in transactions were struck for the entire year.
If acquisitions continue at the current pace, this year will easily top that level. The largest deal of 2016 was SoftBank Group's US$24 billion purchase of Arm.
Competition in the semiconductor industry is hotting up as companies that were once customers, such as Apple, design their own chips and established players like Nvidia branch out into new areas.
One adviser estimates that there are 75 public chip companies now and that number could be cut in half because of consolidation in the next few years.
With the Arm deal, Nvidia gets access to semiconductor designs that are in most smartphones and licences for chips that run thousands of appliances known as the Internet of Things.
Buying San Francisco-based Xilinx gives AMD access to programmable chips for wireless telecoms networks ahead of phone carriers' plans to build out high-speed fifth-generation mobile networks. It also helps the firm expand further in the profitable market for data-centre computer components, currently dominated by Intel. Earlier this month, Intel agreed to sell its Nand memory unit to South Korea's SK Hynix for about US$9 billion.
These rivalries have made the industry stand out in an otherwise sluggish deal market. Globally, mergers and acquisitions in all sectors are down roughly 23 per cent to about US$1.9 trillion from the same period last year, Bloomberg data shows.
BLOOMBERG
