The semiconductor industry integration tide has not yet retreated. After NXP announced the acquisition of Marvell's wireless connection business last month, it has re-created a large-scale semiconductor merger.
On June 3, Infineon officially announced that both Infineon and Cypress have signed a definitive agreement. Infineon will acquire Cypress for $23.85 per share in cash, with a total value of 9 billion euros. $10 billion). Currently, the transaction has been approved by the Cypress Board of Directors and the Infineon Supervisory Board and is expected to be completed by the end of 2019 or early 2020.
Infineon was formerly the semiconductor division of the Siemens Group. In 1999, it was officially independent from Siemens. It is in the forefront of the world in automotive electronics, power semiconductors and security chips. Cypress was founded in 1982, mainly for automobiles, industry, Embedded solutions such as consumer electronics.
Both parties to the transaction have an important position in the global semiconductor industry. This is a multi-billion-dollar acquisition involving two well-known semiconductor manufacturers in the world. What kind of chemical effects will the merger and the impact on the semiconductor industry?
Infineon's acquisition expansion
For the acquisition of Infineon and Cypress, the industry is not very surprised, because the "buy" and "sell" of the two seem to have a warning.
In recent years, Infineon’s intention to expand through mergers and acquisitions is very obvious. In July 2016, Infineon announced that it intends to acquire US-based company Cree's Wolfspeed power and RF business unit for $850 million. Wolfspeed is the world's leading supplier of SiC and GaN power and RF solutions.
However, since Wolfspeed's main business, SiC and GaN, are key components in the manufacture of military equipment such as active phased array radars, the acquisition was rejected by the US government on the grounds of jeopardizing national security. To this end, Infineon paid Cree a $12.5 million break-up fee.
Although the acquisition of Wolfspeed was frustrated, the pace of acquisition of Infineon has not stopped. In October 2016, Infineon announced the full acquisition of Innoluce, a Dutch laser radar supplier, to further consolidate its focus on autonomous driving. In August 2018, the industry reported that Infineon intends to acquire STMicroelectronics, and said that Infineon had hired consultants to engage with STMicroelectronics as early as 2017, and negotiated the acquisition plan within three months.
This unsuccessful acquisition has not been successful, but it is not difficult to see that Infineon has been trying to consolidate and strengthen its market position in the automotive electronics field through mergers and acquisitions. This acquisition of Cypress is very good in the industry. understanding.
Cypress's strategic adjustment
As for Cypress, it has sold its old business units or non-core business units in the past decade, including the sale of some fabs, network search engine product lines, image sensor subsidiaries, and virtual static random access memory services. Mobile device touch business.
At the same time, Cypress is also expanding its business through acquisitions. In December 2014, Cypress acquired the flash memory giant Fesso Semiconductor for $4 billion, making Cypress's revenues exceed $2 billion, and rapidly expanding its market in flash memory and microcontrollers. status.
In 2016, Cypress made major adjustments to its own development and launched the Cypress 3.0 strategy, announcing the transition from a technology-based company to a proximity-based company. The strategy focuses on the Internet of Things, automotive, consumer electronics and industry. The application market, in which the car and the Internet of Things are the main focus.
(Source: Cypress's official website)
In order to meet the needs of the new strategic development, Cypress has carried out a number of sale/strip and acquisition initiatives in recent years.
In 2017, Cypress announced the sale of its fab in Bloomington, Minnesota, USA; in October 2018, Cypress announced a joint venture with SK hynix, divesting its NAND flash business, and focusing on NOR in the future. Flash memory, especially the automotive storage market.
During the period, Cypress also acquired M&A to consolidate key businesses. In July 2016, Cypress acquired the Internet of Things division of Broadcom Semiconductor for $550 million; in December 2018, Cypress announced that it has completed its leading software and cloud service provider for Wi-Fi products. Cirrent's acquisition.
Along with a series of sale/acquisition, Cypress's intention to sell the whole has been circulated in the industry for a long time. After a long period of self-adjustment and strategic transformation, Cypress seems to have more clear its future development direction. The final choice was to merge with Infineon.
High-value, high-value acquisition
Even if Infineon intends to "buy" and Cypress intends to "sell", it is not only this factor that has led to the choice of the two and the agreement.
On May 31, Cypress's share price closed at $17.82 per share, with a market capitalization of approximately $6.5 billion, while Infineon acquired $23.85 per share in cash, which is worth more than $10 billion for Cypress. Super Cypress market value. Bloomberg News quoted people familiar with the news that Infineon gave the purchase price competition, Plath considered the sale price after the offer was more than 50% higher.
One-third of the premium, or another important factor for Cypress to choose Infineon, but willing to spend such a big price, Infineon can be said to be sincere, or to be determined, then the value of Cypress where?
According to the data, Cypress has two major business divisions, among which MCD Division (microcontroller and connection department) includes microcontrollers, automotive and connectivity products, and MPD Division (memory division) includes RAM, Flash and subsidiary AgigA. Tech's products. According to relevant organizations, Cypress's USB, USB-C, MCU, SRAM/NOR Flash and other products are among the world's leading market players.
As for performance, Cypress's revenue has been on the rise in recent years. In 2018, Cypress reported that Cypress achieved revenues of 2.48 billion U.S. dollars in the fiscal year of 2018, a record high, up 6.7% year-on-year; of which auto business revenue increased by 13% year-on-year, and auto is one of the most important end markets. Revenue accounts for more than 30%.
(Source: Cypress Official WeChat)
In its press release, Infineon pointed out that the two sides are highly complementary in terms of technology, which will further expand their market potential in high-growth markets such as automotive, industrial and Internet of Things. Cypress has a differentiated portfolio of microcontrollers, software and connectivity components that complements Infineon's leading power semiconductor, sensor and security solutions.
Combining the technical assets of both parties, Infineon will be able to offer more comprehensive and advanced solutions for high-growth applications such as electric motors, battery-powered devices and power supplies. Infineon's security expertise combined with Cypress's connectivity technology will enable the company to accelerate its entry into new IoT applications in the industrial and consumer markets.
In addition, in automotive semiconductors, the expanded combination of microcontrollers and NOR flash memory will offer great potential, especially in the application of advanced driver assistance systems and new automotive electronic architectures.
The world's eighth largest chip maker & automotive electronics giant
In addition to the complementary advantages of the product line, if Infineon successfully acquires Cypress, it will directly affect the global semiconductor industry and the automotive electronics market.
First, the combination of the two will significantly increase Infineon's revenue scale. Data shows that Infineon achieved revenues of 7.6 billion euros (about 8.51 billion US dollars) in fiscal year 2018, while Cypress achieved revenues of 2.48 billion US dollars in fiscal year 2018. When the two merge, a revenue scale will be born. A $11 billion semiconductor manufacturer.
According to the ranking of global TOP10 semiconductor manufacturers in 2018, Infineon will surpass NXP, Western Digital, and STMicroelectronics to advance into the top ten global rankings and become the world's eighth-ranked semiconductor manufacturer.
Infineon pointed out in its press release that "based on the 2018 euro test preparation revenue of 10 billion euros, this transaction will make Infineon the world's eighth largest chip manufacturer. In the original global power semiconductor and security Based on the controller, Infineon will become the leading chip supplier in the automotive electronics market."
As Infineon said, the acquisition of Cypress will have a more significant impact on its market position in automotive electronics. Although this acquisition can help Infineon break through in the fields of industry and Internet of Things, an unnamed industry analyst believes that strengthening its market position in the automotive electronics field is the main purpose of Infineon's acquisition of Cypress. .
From a business perspective, Infineon mainly covers automotive electronics, power management, industrial power control, digital security solutions, etc., in which the automotive electronics division accounted for 43% of its revenue in 2018, which is its largest source of revenue. The future will also be an important development direction.
Prior to this, Infineon has achieved good results in its three core business areas of automotive electronics, power semiconductors and security chips. It is second only to NXP in the global automotive electronics market, with a global market share of nearly 20% in the power semiconductor market. It ranks first in the world and is far ahead, and is also the world's number one in the security chip market.
The above-mentioned industry insiders said that automotive electronics is also one of Cypress's important markets. After the acquisition of Cypress, Infineon's market position in the automotive electronics field will be significantly improved, especially in the MCU. Coupled with Cypress's share of the automotive electronics market, Infineon is expected to surpass NXP as the world's largest supplier of automotive semiconductors.
For domestic semiconductor manufacturers, Infineon and Cypress's revenue in the Chinese mainland market accounted for 25% and 33% respectively, while domestic MCUs and analog ICs have always been weaker parts, if Infineon The successful acquisition of Cypress will increase the competitive pressure of domestic manufacturers.
However, the acquisition transaction has yet to pass the anti-monopoly review, and global trade instability has also added uncertainties to the transaction, and subsequent development needs to be addressed.
