SAN FRANCISCO—Texas Instruments Inc. signed a definitive merger agreement to acquire National Semiconductor Corp. for $6.5 billion in cash, the company said Monday (April 4).
"This acquisition is about strength and growth," said Rich Templeton, TI's chairman, president and CEO, said in a statement. Templeton said TI believes it can accelerate growth of National's products with its considerably larger sales force.
The deal, which remains subject to regulatory review and the approval of National's shareholders, would bring together two of the longest-running semiconductor companies and two of the largest vendors of analog chips. TI, founded in 1947, is the No. 1 vendor of analog chips. National, founded in 1959, accounted for about 3 percent of the $42 billion overall analog IC market in 2010.
Steve Ohr, an analog semiconductor analyst at Gartner, said there is a good deal of overlap in the product offerings of TI and National. Ohr said the acquisition would provide TI with a way to grow rapidly, but that it wouldn't necessarily give TI product lines that it couldn't have developed internally.
Ohr said TI and National would complement each other in some ways and that, culturally, the companies are very similar. "These companies were very similar in their talents and strengths," Ohr said.
"There are a lot of overlapping products, but I don't think that's an issue at all. I think the real thing here is they are acquiring customers and diversifying their customer base," said Susie Inouye, an analyst with market research firm Databeans. Inouye said the acquisition would bring TI into a lot of new customers in the industrial marketplace.
"TI is not on an acquisition spree, but they are shopping for capacity and technology," Inouye said. "I think the main drivers for this acquisition are the customer base and [National's] sales force."
According to Databeans, National was the seventh-ranked analog IC supplier in 2010 and 2009. National was the No. 3 player in both general purpose analog and amplifiers/ comparators in 2010, according to Databeans.
Greg Lowe, senior vice president of TI's analog business unit, said TI had done intensive analysis on National's product line and concluded that the two companies' product lines are generally complementary. In some areas where the two may appear on the surface to compete head-to-head, Lowe said, "if you peel back the onion" it becomes clear that the products are used in different applications.
Lowe gave as an example switch mode power supplies. TI offers its Swift switchers with integrated FETs, which are mostly used in low-voltage applications, while National offers its Simple Switchers, mostly used in high-voltage applications.
"We've analyzed this across a number of product areas, and when you peel the onion one single layer, the portfolios are complementary," Lowe said.
"Our two companies complement each other very well," said Don Macleod, National's CEO. "TI has much greater scale in the marketplace, with its larger portfolio of products and its large global sales force. This provides a platform to enhance National's strong and highly profitable analog capability, power management in particular, leading to meaningful growth."
According to Ohr, TI was looking into acquiring several companies in the $100 million to $300 million annual revenue range during the tail end of the most recent downturn.
TI ranked No. 4 in the world in overall semiconductor sales in 2010 with revenue of $11.9 billion. The addition of National's revenue would have made TI the No. 3 chip vendor in 2010, ahead of Toshiba and trailing only Intel Corp. and Samsung Electronics Co. Ltd., according to Gartner. National had revenue of $1.42 billion in its fiscal 2010.
According to market research firm IHS iSuppli, the
acquisition would particularly bolster TI's lead in the market for
voltage regulators. TI was the leading voltage regulator supplier in
2010, with $1.7 billion in revenue and market share of 18.1 percent,
while National was the third largest supplier with market share of 15.2
percent, according to IHS. The combination would have given TI $2.4
billion in regulator revenue for 2010, good for 26.5 percent of the
market, IHS said.
The global voltage regulator market expanded
by 36.3 percent to reach $9.1 billion in 2010, better than overall IC
growth of 32 percent, according to IHS. In the past nine years,, the
global semiconductor market has expanded by 93.1 percent while the
voltage regulator segment has expanded by 169.4 percent, IHS said.
to IHS, the combined TI and National would have had analog IC revenue
of $1.3 billion and 24.6 percent share of the analog market in 2010.
Hopefully TI will do better this time than with their Luminar Micro aquisition a couple years ago. I had to flush their Tempest class Cortex M3 core after suffering for 18 months with buggy silicon. I am going to steer away from any TI or NSC devices for the next couple years until the dust settles. Once burned - twice shy...
I can recall when the National Semiconductor Corp. was on top of the world. This is no surprise. It should be a good investment for Texas Instruments Inc. The National Semiconductor Corp. planets have not been profitable over the last few years. Therefore, this is a good move for both parties.
Trying hard to feel like this is just Ford buying Chevy, and not like it is the Cowboys buying the 49ers... but either way, the electronics biz just got a little less colorful and interesting. I'll leave the business details to the experts to sort out.
Good catch eewiz, but this blunder makes me think, what adqusition could help TI have a better CCS IDE, with better ease of use (graphical engines, ... etc) and depth to realize improved system level solutions.
Software is another frontier that TI may explore... just a thought.
@VincePG: I hear you, the Valley is increasingly devoid of Silicon. And more than 90% of the "Web Valley"ers don't know what they are doing and can't really code. If you take away the widgets in an IDE (integ dev environment), they can't code any thing! I was at Product Camp last weekend (@eBay this time) and chatted up a conversation with one of the "Web Valley"ers, mentioned bubble sort and got blank stares!
Does the acquisition mean Bob Pease can finally retire?! :-)
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