At a macro level, the merger is about more efficiently marrying analog with digital, enabling new markets for the merged company and new applications for customers.
At a tactical level, it highlights an emerging battle between programmable logic vendors and microcontroller companies. Indeed, it sets the stage for what will be a thoroughly enjoyable smackdown between Actel’s Fusion and SmartFusion product lines and Cypress’s PSOC platform.
Are you, as the man says, ready to rumble?
At a financial level, MicroSemi clearly needs to move up the value chain. Its stock has, for the most part, under-performed its peer group since the industry’s public companies began to turn northward in mid-November 2008.
Selling onesie/twosie analog parts is a death dance with cost-cutting and volume-stalking, so most analog vendors are feverishly doing what their digital cousins did decades ago: integrating what makes sense into modules and selling the cost-saving, real-estate-maximixing, power-reducing benefits--see
You get the picture. And more is better in a commodity market.
So to synergy: Mil-aero and rad-hard are not sexy, but it's a solid business, and both Microsemi and Actel have excellent positions there. Check.
Longer term, though, this merger reflects the new semiconductor industry and the long-simmering trends that have gotten us here.
As FPGAs slowly overcome their historical cost issues as process geometries get smaller, they become more and more popular. More end markets have shorter half-lives, which makes FPGAs even more appealing because they don’t have to worry about the dreaded volume cross-over where ASICs win the day on cost.
The historic evolution of FPGAs has been to slowly add IP outside the core fabric, starting first with processor cores. Actel carved a niche for itself with Fusion, and this year, with the rollout of SmartFusion (FPGA+CPU+analog features), took analog functionality to a different plane.
Actel doesn’t look for Altera or Xilinx on this field of battle; they look to controller vendors and especially Cypress and its programmable system-on-chip (PSOC).
They consider Cypress to be a little stronger right now on the analog side, while they consider their own architecture to have much better programmability features.
Here’s a list of analog peripherals in the Cypress CY8C55:
1.024 V±0.1% internal voltage reference across –40 °C to 85 °C (14 ppm/°C)
Configurable delta-sigma ADC with 12- to 20-bit resolution
Two SAR ADCs, each 12-bit at 1 Msps
80 MHz, 24-bit fixed point digital filter block (DFB) to implement FIR and IIR filters
Four 8-bit 8 Msps IDACs or 1 Msps VDACs
Four comparators with 75-ns response time
Four uncommitted opamps with 25-mA drive capability
Four configurable multifunction analog blocks.
The Actel SmartFusion devices offer analog features such as:
DACs (12-bit sigma-delta)
bipolar high voltage monitors.
These are not apples-to-apples comparisons, but you get the drift. These features were unheard of in FPGAs a few years ago.
System integration story
So there is a device-integration play at work here, but there's also a system-integration story as well.
If Actel is chasing an motor control win, don’t you think they love the idea that they can say “oh, by the way, since you're buying our FPGA, we have the peripherals you need too, including transformers, drivers, IGBTs, regulators, and more.”
You bet they do.
The same works for the Microsemi sales force from the analog perspective.
The bottom line is the semiconductor industry is reforming itself yet again. Passing are the days when everyone specialized in something vertical. Horizontal integration is the current wave, and it’s what drives mergers like this.