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Silicon_Smith
Funny!! :)
KeithMullins
Hopefully TI will do better this time than with their Luminar Micro aquisition a ...
TI to buy National Semi for $6.5 billion
Dylan McGrath
4/4/2011 4:38 PM EDT
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.
According 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.
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Frank Eory
4/4/2011 5:31 PM EDT
Wow, TI the analog juggernaut!
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hm
4/4/2011 5:36 PM EDT
WOW! No. Both NSC and TI are very innovative organizations. We do want as NSC independent innovative vendor.
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janine.love
4/4/2011 7:25 PM EDT
I have to admit, this took me by surprise. I'm curious to see where this leads in terms of product innovations.
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yalanand
4/4/2011 8:10 PM EDT
Wow, Awesome. TI at No. 3 will definitely put lot of pressure on Intel and Samsung. TI has done some really smart acquisition including buying RFAB during recession. Congratulations to both TI and NSC.
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extier
4/4/2011 10:22 PM EDT
The bigger challenge for Nat-Semi engineers will be the extreme micro-management within the analog business units at TI. The casual silicon valley lifestyle is not something that will work at TI. I wonder which other company will be an acquisition target now that consolidation seems to be taking place.
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kendallcp
4/5/2011 12:08 AM EDT
A certain amount of deja vu, as an ex-BB/ex-TIer. There are some particular strengths in NS's portfolio and a little truth to the 'complementary' assertion. Salesforce integration and product line cross-training will take a while to work out. My take on this is that it's essentially a defensive move on TI's part. In the hands of a leaner, faster, Valley-based competitor (Maxim or LTC both come to mind), NS's staff, technologies and portfolio would be much more of a threat to TI. They just had to neutralize that. Just my few dBs worth...
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GREAT-Terry
4/5/2011 1:06 AM EDT
Will TI continue to buy some other analog companies? If they are willing to pay over $6B to acquire NSM, I wonder one day they will knock the doors these two analog leaders.
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dylan.mcgrath
4/5/2011 1:39 AM EDT
@GREAT-Terry: Good question. I would assume that TI will have to digest this acqusition and rebuild its cash stockpile before considering other large acquisitions. Who knows that the landscape will look like at that point.
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Krutsch Robert Cristian
4/5/2011 3:05 AM EDT
This is horror news for anybody that appreciates competition…
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prabhakar_deosthali
4/5/2011 6:44 AM EDT
It is saddening to see some of the long lasting names in the semiconductor industry getting lost in the acquisition game. At one time NS was being compared with Intel and Motorola when 32 bit microprocessors were being introduced. Each company came with a totally different architecture at that time and by technical comparison the NS 32 bit architecture was rated as the best.
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sranje
4/5/2011 11:06 AM EDT
TI makes components but it sells "block diagrams", that is, superior and complete solutions
S-factor (S for solutions) revenue and profit benefit – a system’s strategic component pulls in an entire solution revenue and generates a superior profit
-- TI has to provide all solution’s elements (directly or indirectly via partners)
-- Strategically critical solution technologies are acquired or partnered
-- Power management (standard power products - a 2-year old new HPA group) was $1.77B in FY2010 - HPA group (standard signal chain products) was $1.79B
National is the second ranked power management IC vendor (after TI); nearly one-half of its total $1.4B revenues comes from power management.
National is also well positioned to become the
industry's top IC vendor in terms of performance and valuation -- IF it can reduce its large GSA expenses - something, like changing a DNA, is very difficult to do. In this win-win merger TI will solve that ;-))
National was founded in 1959; its revenues declined 50% from $2.7B in 1997 to $1.4B in 2010. For decades the company was wandering
in a digital desert pursuing "PC on chip" and other distractions; only in 2005 did National
reintroduce a word "analog" in its description.
BTW - it is also fairly obvious who will likely acquire whom next...
http://www.petrovgroup.com/pdfs/National%20article%20-%20published%20July%205-10.pdf
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VincePG
4/5/2011 5:19 PM EDT
This is reaffirmation of two trends:
1. The silicon business is mature both in the US and worldwide and will continue to experience consolidation.
2. Silicon Valley, isn't anymore. The name should be changed to Social Networking Valley or Web Valley or Google Spin Out Valley. Hardware is dying in the valley and in the nation. Mature industries are cost conscience and costs in the Valley are too high for silicon companies.
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HarfangDesNeiges
4/5/2011 5:29 PM EDT
Who's next?
Today's market seems to have already figured it out:
"STMicroelectronics NV jumped 2.9 percent and Infineon Technologies AG surged 1.8 percent after Texas Instruments, the second-largest U.S. chipmaker, agreed to buy National Semiconductor."
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Singh_Y
4/5/2011 6:05 PM EDT
To counter TIs dominance in Analog, this does not rule out a Maxim Linear Meger. Maybe this was TI's way to get back to Silicon Valley after moving its staff nearly a decade ago to Texas;
Dont forget that TIs net purchase was only a 50% premium given that National had Cash of over $ 1 B
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colin_harrin
4/5/2011 10:00 PM EDT
Any effect on the distribution chanel for both of these 2 vendors?
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Neetin
4/6/2011 12:42 AM EDT
Reminds one of the Radio Corporation of America, RCA to most of us.
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eewiz
4/6/2011 1:52 AM EDT
National Net income for last FY was ~200m$. This is including sales of all the overlapping products with TI. Considering this, the price of 6.5B is too high IMO. Even if TI retains all the "customer base" of NSC, howmuch it translates to real income is questionable.
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MarkusMeng
4/6/2011 4:41 AM EDT
I'am surprised!
As an electronic design engineer for more than 20 years this is bad news for me :-(
Nothing against TI and nothing against National. I love both of them for their products. But competition was best for them.
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KB3001
4/6/2011 10:34 AM EDT
It can't be good for competition indeed. However times are hard and consolidation is the name of the game. There is no reason why fragmentation would not reoccur at some time in the future though. For the time being, we are in a cycle of consolidation.
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KB3001
4/6/2011 10:35 AM EDT
Any talk of redundancies?
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gsdg90
4/6/2011 3:04 PM EDT
Seems TI already has 95% of NSM's product line (only new line for TI will be PLL's). Here come major layoffs and price increases...
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zeeglen
4/6/2011 3:26 PM EDT
Was just about to ask similar. But need not worry, read a wonderful announcement that a huge corp is about to create 50,000 more jobs in the chip industry.
Oh... wait... fries, not chips... :-(
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Silicon_Smith
4/9/2011 11:21 AM EDT
Funny!! :)
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Joe Joe
4/6/2011 11:03 PM EDT
Strange, I always thought TI would be more interested in Atmel or Microchip. NSM seems more like a subset of the existing TI. I bet they really like that the NSM Maine fab is only 60% loaded and can handle 0.13um analog tech.
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kinnar
4/7/2011 4:01 AM EDT
That means LabView and CodeComposerStudio will be having a more better connectivity with each other, these are the two leading softwares used in electronic system development and this merger will surely give some new angles in electronic system design.
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eewiz
4/7/2011 4:28 AM EDT
National Instruments != National Semiconductor.
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ReneCardenas
4/7/2011 1:25 PM EDT
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.
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ReneCardenas
4/7/2011 1:28 PM EDT
Not to forget that TI's pspice and other analog tool offerings could be improved greatly with complement ideas from National Semi Webench and others.
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docdivakar
4/7/2011 1:16 PM EDT
@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?! :-)
MP Divakar
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Ed.Mellinger_#1
4/7/2011 3:05 PM EDT
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.
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Charles.Desassure
4/7/2011 4:51 PM EDT
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.
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seaEE
4/8/2011 12:07 AM EDT
I would be curious if they bought National more for the technology or for market share.
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Sathiyan_HCL
4/8/2011 1:05 AM EDT
Some time back both TI and National Semiconductor are fighting like anything in the Semiconductor market but now both are same.
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KeithMullins
4/8/2011 4:50 PM EDT
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...
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