Yet another Major Semiconductor Deal: Dialog Semiconductor Announces Acquisition of Amtel Corp. for US$4.6 bn

Dialog Semiconductor might not enjoy a brand recall as strong as Apple, but it is the former’s chip technology that powers the latter’s popular iPads and iPhones. Dialogue Semiconductor, a company based in the U.K. and listed on the Frankfurt Stock Exchange, will now shell out US$4.6 bn to buy out Amtel Corp., its rival in the semiconductor industry.

Besides Apple, Dialog’s clientele comprises heavyweights such as Samsung Electronics. Explaining the motivation behind what is being described as one of the largest deals in the semiconductor industry in recent months, Dialog said that it plans to diversify its current product portfolio to serve the automotive industry as well. Amtel is a U.S.-based semiconductor firm that is best known for its embedded systems for microcontrollers.

Given that Dialog’s clients are making headway in the Internet of Things arena, it wants to be prepared for the new business opportunities that will emerge from these market movements. According to sources close to the deal, the transaction is expected to receive the final stamp of regulatory approval by 2016 Q1. This evidently means that Dialog’s 2017 earnings will show a sharp spike. The company is confident that within two years from the closure of the deal, it will be able to report cost savings to the tune of US$150 mn.

Besides a diversified portfolio, Dialog expects the reach of its distribution channels to widen following the acquisition of Amtel.

The Dialog-Amtel deal is the most recent in a string of similar acquisitions and mergers reported from the semiconductor industry since 2014. According to a Bloomberg report, enterprises in the semiconductor industry have spent over US$31 billion on M&As in 2014. The total value of such deals in 2015 has already surpassed that of the previous year.

Several lucrative pockets are developing in the electronics and semiconductor industry, and leading players evidently want to be ready for the future.

European Semiconductor Shipments Show Uptick in July 2015: ESIA

The European Semiconductor Industry Association (ESIA) has reported that the July 2015 shipments of semiconductors saw a marginal spike over June 2015 numbers. The shipments of semiconductors in July approximated US$2.837 billion in July 2015 – a 0.4% hike over the previous month. Market analysts are expecting this upward graph in semiconductor shipments in Europe to continue as the electronics and semiconductor technology finds its footing anew.

Although the shipments, when expressed in U.S. dollars, show a marginal increase in value, the same doesn’t hold true when the shipments are stated in euros. In euros, semiconductor shipments were pegged at €2.55bn in July 2015 which marks a 0.3% decline as compared to the previous month. On the bright side, the sales of semiconductors have risen 7.1% over July 2014, the ESIA says.

The increased demand for semiconductors and microprocessors is being attributed to the positive scenario that’s currently being observed in the logic semiconductor segment. The European IT industry is now also showing an increased demand for memory products, which continue to find uses in novel applications.

The last three months have looked good for the European technology industry, with both consumer and investor sentiment recovering. However, the European technology sector will continue to joust against other factors over the next few years until a full and more stable recovery is reported.

According to the ESIA, the last three months have been particularly positive for the electronics and semiconductor segment. Demand was seen to be strongest for semiconductor devices that are used in computing devices, consumer goods, and communications. There has also been a reported rise in the demand for wire communication applications, which have indirectly augured pushed up sales of semiconductors in Europe. Although 2015 is far from coming to a close, the year has already brought in much dynamism to the semiconductor sector in Europe – a trend that will likely continue into the next year as well.