News & Analysis
Will TI + NSC be less than, greater than, or equal to the individual parts?
Bill Schweber
4/10/2011 8:13 AM EDT
Now that the initial wave of analysis and comments on the proposed acquisition of National Semiconductor Corp. by Texas Instruments has crested, I thought I'd add my views to the next round of opinions. Will the acquisition be a success, a mistake, or mixed event?
Long story short: I don’t know, nor does anyone else know with high certainty. But I do have some perspectives on acquisitions in general, and high-tech ones in particular: I think that they are often less than successful, in most cases. Why? I have these reasons:
• During the period between the initial acquisition announcement and formal legal closing, the company to be acquired has difficulty maintaining internal momentum, despite assurances by both parties. Projects are put on hold, initiatives are slowed down, expenditures are frozen, and everyone becomes cautious.
In our very competitive industry and economy, going into a sleep or quiescent mode is like taking yourself out of the game to rest for a while—but the game doesn't stop.The official line is "for now, everything continues as it was" but that's never the reality.
• On the acquirer's side, management becomes pre-occupied at looking at the specifics of their soon-to be-acquiree. There are meetings, reviews, need for all sorts of numbers and analyses, and many other time-consuming activities that take away from the business fundamentals of identifying and developing products for the customers, and then delivering and supporting them.
Sometimes the acquiring company suffers almost as much as the acquired company, as the mechanics of integrating/slimming two companies, two product lines, two cultures, and two of everything consumes time, energy, and attention, while the real customers get pushed to the side.
• Everyone is afraid for their jobs. When reductions come—and they do—very good people who just happen to be in the wrong place at the wrong time are let go, some of whom contribute in subtle but vital ways to the "secret sauce" that produces winning products.
Although financial wizards think an acquisition or merger is a good opportunity to get rid of below-average performers or slackers, let's be honest: given today's lean-and-mean semiconductor companies, there are very, very few employees who are anything less than pretty good.
• Customers of course, are wary of counting on critical products from the company to be acquired. They rightly wonder if the vital component they put on their BOM will just happen to be one of those to be deleted from the combined roster, due to overlap with a product in the acquirer's portfolio. Who wants to take that chance?
• One of the rationales for these sorts of acquisitions is that the combined company will have even more sales/marketing presence and clout. Perhaps that's true when the acquired company is small, spread thin, in weak condition, or not well known.
But does anyone think that a company such as National Semiconductor is not already very well known and respected by design engineers and purchasing agents? That their sales force hasn’t reached into every nook almost as much as TI's has? I just don’t see it that way.
Don't get me wrong: Texas Instruments is a well-managed, aggressive company with lots of leading products, a deep and broad portfolio, and smart people, and which has invested serious amounts of money in process, fabs, product development, product support, and marketing. They are where they are through serious, hard work and commitment.
But it would be ironic if the TI/NSC acquisition backfired and ended up as a distracting situation for them, and allowed another analog/mixed-signal vendor to actually gain against the pairing. It wouldn’t be the first time that the time and energy devoted to working through the uncountable details of a merger or acquisition instead yielded to the law of unintended consequences, while looking just so great from a financial analyst 's perspective.♦
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bearchow
4/11/2011 7:31 AM EDT
Brian Halla will go down in history as having lost National billions while pursuing several dead ends.
Don McLeod will go down in history as having finally destroyed National Semiconductor.
Yet both will have lucrative retirements.
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hm
4/11/2011 6:45 PM EDT
Innovation from NSC may get scuttle. However, there may be good design team with new ideas at NSC, and they may startup new more innovative organization.
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BryanZhang
4/11/2011 10:22 PM EDT
In 2009, NSC closed Chinese Suzhou site company, at that time NSC need to upgrade its manufactory ability and R&D technology,but now is too later.
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Patk0317
4/12/2011 1:05 AM EDT
There are some interesting points raised in this article. Definitely quite a few jobs will be lost. NaTI will not need two HR departments or two financial groups long term for example. That's unfortunate, but a fact of life in mergers.
On the technical side, I do see a potential issue with Na projects being put on hold at least until they are given due diligence by TI management. TI is a big enough company that their projects will probably be full speed ahead.
Let's revisit this a year from now...
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any1
4/12/2011 9:21 AM EDT
As someone who worked at National Semi during the freewheeling Charlie Sporck era in the early 80's I have fond memories of the National that I knew then. At this point however, National is a mere shell of what it once was and they really didn't seem to have any momentum on their own. Perhaps the merger with TI will change the outlook there so that they are freed to take more risk again. Although I am not optimistic that will happen as TI management has been extremely conservative in the past as well.
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peralta_mike
4/12/2011 10:35 AM EDT
Hello,
I used to work at Burr-Brown which Texas Instruments bought out in 2000.
If history is a guide:
1. TI will force NSC people to do it TI's way - whether or not NSC's way was better.
2. Most of NSC employees will be laid off in a few years.
3. There will some innovation but it will have to be in TI's way not NSC.
4. The NSC site will be 1/5 the size of what it is now (this is what happened to Burr-Brown - it used to have 1500 employees - it now has less than 300 in Tucson).
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parity
4/13/2011 10:27 AM EDT
"On the acquirer's side, management becomes pre-occupied at looking at the specifics of their soon-to be-acquiree."
Maybe so, but in this case it is akin to a wolf acquiring a dazed sheep for dinner. The valuable bits (IP) will be stripped to the bone and the supporting structure discarded. Burp.
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smartP
4/14/2011 12:07 PM EDT
In my opinion; A new era has begun. Ti-Ns is the "Walmat", It will bring manufacturing capability to compete with the Asia IC makers. As for innovation, it is time for Analog world in the Silicon valley to upgrade itself to Intelligent Analog design, Since Widler passed, there is not much advancement. Analog design is just traveling the improving direction for past 20 years then open up new field like when Widler's era. The asia competitors have catched up.
A new era has to begin and a new company needs to surface, that is evolution to keep the analog design on. The world cannot be end up with an embbeded system world only but analog or intelligent analogy needs to surface because intellingent analog does the localization smart/intelligent better then the embedded system which is mainly digital.
Time to move on Bob (Pease) Time to start another new era.
Best Regards
Hendrik Santo
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BicycleBill
4/15/2011 5:21 PM EDT
Hendrik--sorry, I disagree, there have been many,many large and small imporvemnts in analog deisgn and ICs in the last 20-30 years, in fundamental processes, internal topologies,packaging, performance--every dimension and aspect. Don't see how you can so easily dismiss all these. We are a very,very long way from Widlar's famous op amps.
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smartP
4/15/2011 10:39 PM EDT
Bill, Sure you are right, if you look at things in that angle. My view is Widlar's had started many many new directions, IE; as you mention Widlar's op amps, his low voltage op amps was later further develop into today's low voltage op amps.... etc.
However, in the past 20 years, in analog design, as I mention in my previous post, sure things get improve. but there is no new field,it is keep improving and improving the old stuffs. analog design is almost a dead field compare with the era where Widler, Dobkin, and Brokaw cranking out of new ideas and direction. I am a "NS college gratudate " I am fortunate to work close to all these pioneers to be able to learn their philosophy and art; I really think Analog needs to have break though. otherwise, it will be a boring world with embedded core and little functional commodity analog part selling by tons and cheap and no big deal to design, nothing special. Just some thoughts.
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nicolas.mokhoff
4/15/2011 10:50 PM EDT
While it is true that improvements in analog are ongoing since the first op amp, fundamentally it is a products off-the-shelf business. It is my hope that the design teams at both companies find ways to integratie analog with digital in SOCs and make truly system integration come alive. Of course, that all depends if both cultures can overcome their individual FUD (fear, uncertainty and doubt) factor while they wait to get sorted in their new bins. See how history repeats itself: http://en.wikipedia.org/wiki/Fear,_uncertainty_and_doubt
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Bernt
4/28/2011 9:34 AM EDT
There are pros and cons with all kind of changes and merges of companies as well. What I've heard from the market is TI has a more aggressive approach with customer than NSC so the result is another nice guy will disappear from the market and that is not appreciated by the market.
NSC has proven they delivered during the past bad years. TI and many others had more than decent delays.
A TI approach is also to have 30% renewal in average of employees at sales and tech support. It may be a method to keep the costs down because they hire people direct from school. Tech guys (read NSC) with real knowledge costs more.
I am not sure how many of those at NSC will move but i sure the most skilled will find another more attractive employer than TI.
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