One of several deals not done in 2021 but which hung over the year, was GPU vendor Nvidia’s takeover of intellectual property licensor Arm Ltd. for $40 billion heading towards $56 billion. We understand that one reason the deal’s value varies is because it is proposed as a mix of cash and stock. As the value of Nvidia’s stock goes up so the value of what would be paid to current Arm owner Softbank Group increases.
The earliest the deal is likely to close is now mid-2022 and the Chinese regulator could blight the deal simply by inaction. The longer the matter takes the less likely the deal becomes.
Another deal announced in 2020 that had NOT taken place by the time of writing in December 2021 was Advanced Micro Devices’ takeover of FPGA inventor Xilinx. AMD pitched an all-share deal valued at $35 billion in October 2020 (see AMD values Xilinx at $35 billion in take-over bid). Since then AMD’s share price has nearly doubled from about $78 to about $134. That would value the deal at around $60 billion but, of course, at no greater cost to AMD.
There have been reports out of South Korea that the Chinese regulator is not minded to block the deal. The deal could even arrive before the end of 2021, in line with AMD’s prediction at the time of the announcement.
5 Nexperia-Newport Wafer Fab
Nexperia’s acquisition of Newport Wafer Fab in Newport, Wales is small in monetary value but full of the themes of the year: the strategic importance of semiconductors and the West’s relationship with China. Nexperia, a power and mixed-signal ICs spin-off from NXP Semiconductors is owned by Wingtech Technologies Co. Ltd. (Shanghai, China).
However, during the sales process concerns were raised when it was realised that the wafer fab was the UK’s largest and most up to date, and that shortages of semiconductors had hit numerous industries in the UK including the automotive sector (see China’s Nexperia buys Newport Wafer Fab amid concerns).
Subsequently UK prime minister Boris Johnson has said the deal must be investigated by the National Security Advisor Sir Stephen Lovegrove. UK government will investigate takeover of Newport Wafer Fab ). Potentially the deal could be vetoed under the National Security and Investment Act. Good luck with that six months after the event.
Like the Nvidia-ARM and AMD-Xilinx deals, Analog Devices’ takeover of Maxim Integrated Products for $21 billion was listed in our 2020 list (see A baker’s dozen of the deals that shaped 2020). The deal was predicted to close in mid-2021 and it did so in August. China’s regulator granted permission helping to lift Analog Devices up to rival Texas Instruments as the world’s leading analog chip supplier. Because of the increase in Analog’s share price over the 14 months the all-share deal ended up being worth $30 billion (see Analog Devices gets China’s blessing for Maxim takeover).
The Dialog acquisition primarily brings Renesas more thematic and geographical diversity. The company, which previously had its R&D focus on Japan and the Far East, now gains around 1800 additional developers with a focus primarily in Europe. And, of course, additional business opportunities especially in the application areas of IoT, infrastructure and industrial.
8 SkyWater Technology IPO
The strong recovery of global stock exchanges after a dip due to the Covid-19 pandemic encouraged a number of companies to accelerate plans to go public.
Skywater Technology Foundry Inc. was founded in 2017 by the buy-out of a former Cypress Semiconductor wafer fab. SkyWater operates as US-owned pure-play semiconductor foundry and Department of Defense trusted supplier. It is also a novel technology process developer and part of focus of ‘re-shoring’ technology by the US (see SkyWater foundry reports financial loss after going public).
9 Rockley Photonics SPAC
Rockley Photonics Ltd. is a UK-California company created by Andrew Rickman, a pioneer of silicon photonics, and named after a village in Wiltshire, England. The company was taken public in 2021 by one of the deal mechanisms du jour, the special purpose acquisition company. The merger with publicly traded SC Health Corp. was expected to bring gross proceeds of $323 million to the combined company and the involvement of Medtronic plc (see Rockley takes SPAC route to go public as health business).
There had been a plan for Mubadala, the investment arm of the Abu Dhabi government, to start getting money back on its ownership of Globalfoundries by way of an IPO in 2022. But with much in play, including the possibility that Intel might wish leverage its way in foundry by way of an acquisition, the IPO button was pressed and the deal concluded on November 1. (Qualcomm wants in as GloFo valued at $25bn in IPO pricing).
This is one venture capital deal that is worth mentioning. It has been the case that equity funding has been pouring back into hardware for at least the last five years. That is partly because a transition to machine learning computation, the rise of quantum computing and 5G communications all provide opportunities. But it is also because the cost of participating at the 7/5/3nm nodes requires hundreds of millions of dollars. US VCs are definitely of the “bet big or go home” mentality.
This was demonstrated by a SambaNova Systems Inc. (Palo Alto, Calif.), a 2017 startup founded to commercialize the work on machine learning of Stanford University Professors Kunle Olukotun and Professor Chris Ré (see Startup SambaNova raises $676 million in Series D).
I think this is the largest venture capital round in the semiconductor space ever undertaken although the company looks set to offer Dataflow-as-a-Service (DaaS), a subscription-based, extensible AI services platform.
Cobham and Ultra Electronics were two of the leading independent UK defence electronics companies. That was until US equity capital firm Advent International completed a $4 billion takeover of Cobham in January 2020.
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