SAN FRANCISCOIntel Corp. may look to acquire an FPGA supplier such as Xilinx Inc. or Altera Corp. in 2010 in an effort to expand its presence in the embedded market as well as SoCs, according to a Wall Street analyst.
Christopher Danely, an analyst with JP Morgan Securities Inc., said in a report titled "Top 10 Semiconductor Predictions for 2010" that the year could bring a big strategic acquisition to the semiconductor space. In addition to Intel acquiring an FPGA vendor, Danely speculated that other large acquisitions could be possible, including Analog Devices Inc. (ADI) buying a power management IC company and Microchip Technology Inc. buying a company to expand its presence in the microcontroller market.
Intel has been gearing up to expand its presence in the embedded space, last year acquiring embedded software specialist Wind River Systems Inc. and porting unspecified Atom processor cores to Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC)'s technology platform. Danely speculates that an acquisition of Xilinx or Altera would jump start these efforts, but it is unclear how the FPGA technologies would mesh with Intel's. Like many companies, Intel previously played in the programmable logic space but abandoned those efforts years ago.
Danely said that both Actel Corp. and Lattice Semiconductor Corp. would be unlikely targets for Intel (Santa Clara, Calif.) because of their relatively small size. Xiliinx (San Jose, Calif.), the market leader in programmable logic, would make a more attractive target for Intel than No. 2 player Altera (San Jose), Danely wrote, because Xilinx has higher operating expenses and could offer Intel higher cost savings opportunities.
Altera, a customer of Taiwan Semiconductor Manufacturing Co. (TSMC), has in recent years maintained a process technology migration lead over Xilinx, which uses foundry suppliers United Microelectronics Corp. (UMC), Samsung Electronics Co. Ltd. and others. Danely speculated that Intel could significantly boost Xilinx by buying the company and migrating its products to Intel process technology, which is the most advanced in the industry.
Another Wall Street analyst, Hans Mosesmann of Raymond James Equity Research, doesn't share Danely's view. Mosesmann said his firm would "wholeheartedly disagree" with speculation that Intel might buy Xilinx or Altera, at least in 2010.
Mosesmann said Intel really wants to be relevant in wireless and smartphones. An acquisition of Xilinx or Altera would have no value in that endeavor, he said.
Mosesmann noted that Intel already tried its hand in programmable logic but ultimately sold its PLD business to Altera for about $50 million in 1994. "They've been there," he said. "They've done that. It's not their gig."
Intel, which has about $13 billion in cash on its balance sheet, would certainly have to dig deep to buy Xilinx. Xilinx has a market capitalization of roughly $6.7 billion, and shareholders would no doubt expect a premium over the company's current stock price of a little over $24.