Most people are aware of drastic consolidation in the semiconductor industry especially in the RF sector. In just over a years time, MACOM acquired Nitronex, TriQuint and RFMD merged, Murata bought Peregrine, NXP acquired Freescale - but is selling off the NXP RF power business to Jianguang Asset Management (China), Infineon acquired International Rectifier, Cree is spinning off their RF power business, Avago is acquiring Broadcom, Intel is buying Altera and the list goes on. This level of consolidation and confusion seems unprecedented in our industry. What is causing all of this uproar?

It seems like after many years of economic worries, companies have become cash rich pushing off investments in case the economy takes another downturn. While many companies in other industries have chosen to buy back stock shares in order to push up their stock price, it seems like semiconductor companies have taken a different path. With pressure to improve margins, it seems like there has been a feeding frenzy to acquire other companies to obtain operating cost reductions. Also, with the excitement over the upcoming Internet of Things explosion, companies seem to be positioning themselves with the multiple technologies they need in order to satisfy their customers across many applications.

In the GaN market, MACOM has catapulted the company into a major GaN player after acquiring Nitronex, even though both were previously minor players. MACOM’s long-term vision of using Si CMOS fabs to manufacture their GaN on Si could drive down the cost of GaN devices to that of LDMOS and displace a large portion of that business, if it works. The Infineon purchase of International Rectifier is interesting in that Infineon could also being planning the same play as International Rectifier owns the IP for GaN on Si (MACOM has IP agreements in place but not sure if they are exclusive or if they expire over time). While most of Infineon’s effort will certainly be on the power switching market, they could become a player in the RF power business with this move since they already supply GaAs and LDMOS devices to the market. The merger of TriQuint and RFMD as Qorvo is the largest RF device company in the market and in the GaN market they bring together the Defense market strength of TriQuint and the commercial market strength of RFMD as a formidable player in the market. The spinoff of the RF power business for Cree is a smart move as they can focus on the RF market and not be the small division of Cree that got lost in the company due to the much larger LED business that dominates their business. And not to be forgotten, Freescale entered the GaN market recently so as part of NXP they will also vie for a strong position in this market. The Japanese GaN players like Sumitomo and Mitsubishi have been quiet in all of this uproar at least when it comes to GaN. They seem to focus mostly on the satellite market but certainly have very good performance capabilities in other applications.

The purchase of Peregrine by Murata seems to be the best match of the bunch as it gives Murata’s module business access to some of the best switches (and other devices) in the industry, but also gives Peregrine a large backer with great assembly expertise and market presence in the wireless industry.  It might but the final piece in launching their Global 1 CMOS single chip front end into high production for handsets as Murata is already the leader in switch modules there. It will be interesting to see how this lines up against Qorvo and Skyworks who are using a “best technology” approach to the handset front end module. Avago is also in the mix but always seems a bit behind these two in market share. There is also Qualcomm lurking in the background with their RF360 CMOS module approach to the handset front end.  Qualcomm has announced a few design wins, but while it made a big splash when released a couple a years ago, it does not seem like the RF360 has lived up to its expectations to date.

Now enter the Chinese - Jianguang Asset Management is purchasing the NXP RF power business as China has been trying to develop a semiconductor industry for years.  This would be the first significant play into the RF semiconductor business for China that I have seen. With some government money behind this, it could transform them into a major RF player as this business is currently the #2 player behind Freescale in RF power devices. I expect the Chinese to make more purchases in the semiconductor area in the near future. As far as more consolidation, there are rumors that Qualcomm will need to respond to the Intel purchase but there has been so much consolidation to date, I would think it would calm down soon - but that is what I thought a few months ago. Let me know what you think.