LCD-controller vendor Genesis Microchip Inc. last week said it will acquire rival Sage Inc. for $241 million in a stock deal aimed at vaulting it to the top of one of the semiconductor industry's fastest-growing markets.
The merger will make Genesis the leading supplier in all seven of the LCD-controller industry's major chip segments, according to analysts. "Genesis is number one in two of the chip segments, and Sage is number one in five," said Ross Young, an analyst at DisplaySearch, Austin, Texas. "The combined company will have 66% of this rapidly growing market."
San Jose-based Genesis said it was attracted to Sage's leading position in consumer LCD drivers. "This acquisition allows Genesis to accelerate its growth in consumer video ICs by capitalizing on Sage's technological capabilities and the Faroudja brand name," said Amnon Fisher, Genesis' chief executive, in a statement.
The two companies have not always appeared to be likely bedfellows, Young noted. "There were times when they hated each other, especially last year when their market share was much closer to each other's," he said. "Then they became jealous of the market share Pixelworks had, and so they rallied [together]."
The deal was also likely encouraged by the fact that rapidly falling LCD prices are driving significant unit sales growth for screens used in applications like notebook PCs and desktop monitors. The LCD-controller market will generate $54 million in third-quarter sales, a 37% increase from the prior quarter, according to Young.
Genesis, which leads the market in unit shipments of integrated analog and dual LCD controllers, said last month it expects September-quarter revenue to jump to $30 million, a 41% sequential increase.
Sage leads five LCD-controller categories on a unit basis: discrete scalar, integrated digital, integrated analog smart panel, integrated digital smart panel, and integrated dual smart panel. The Milpitas, Calif., company posted sales of $33 million for its fiscal year ended March 31, losing $7.3 million.
When merged, the companies' biggest competitors will be Philips Semiconductors, Pixelworks Inc., and STMicroelectronics Inc.