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Quest for Scale and Share Driving Semiconductor Industry Consolidation - The Doves and the Hawks
Semiconductor Market Analysis and Commentary
26 Jun 2015 - Futuresource Consulting have released this new report which explores the wave of M&A deals that have swept through the semiconductor industry in the last 18 months which have totalled almost $100 billion, with the number of transactions substantially higher than normal in an industry characterised by market-focused asset trading.
This latest report is part of the perspectives series and unwraps key themes around what is driving the current wave of takeovers, mergers and consolidation, including the impact it is having on competition.
According to the SIA (Semiconductor Industry Association), global sales of semiconductors grew 9.9% in 2014 to reach a record $335.8 billion. Growth in the Americas was particularly strong at 12.7%, as was Asia-Pacific at 11.4%, driven by China, which is by far the largest consumer of chips to feed its product manufacturing base.
The report highlights how this trend in the semiconductor market reflects demand for ever more powerful devices, ubiquitous networks and storage to underpin the march towards the Information Society and Internet of Things (IoT). Electronics continues to pervade every walk of life e.g. Automotive, Industrial, Transportation and Retail, and the next wave of software-driven innovations will include high level MMI (Man Machine Interface) and Cloud Computing e.g. visual recognition, voice input, remote sensing, artificial intelligence, robotics and expert systems.
"All this will result in continuing demand for increasingly advanced semiconductors, with the additional need to reduce energy usage at the same time," commented John Bird, Principal Consultant, Futuresource Consulting. "The buoyant market is reflected in semiconductor stock prices, which were solid in the last 18 months, hence easing capital availability and maintaining investor confidence during the wave of M&A activity which is currently in progress."
Futuresource believes there are several forces which are fostering industry mergers which include companies wanting to increase operating scale, strategic marketing control and financial rationalisation.
Futuresource analysis shows that the Top 10 players in semiconductors held a combined worldwide share of just over 50% in 2014. This is likely to increase in the next two years as current and possible future mergers increase market concentration.
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Futuresource Consulting is a specialist research and knowledge-based consulting company, providing organisations with insight into consumer electronics, digital imaging, entertainment media, broadcast, storage media, education technology and IT. With a heritage stretching back to the 1980s, the company delivers in-depth analysis and forecasts on a global scale, advising on strategic positioning, market trends, competitive forces and technological developments. www.futuresource-consulting.com
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