The chips in our computers, graphics cards, cars, microwaves, refrigerators and phones are in short supply these days. A global semiconductor shortage is making it hard for everybody to get their hands on this necessary technology. Most of this shortage was self-inflicted. Take car companies for example; they didn’t expect millions of deliveries when the pandemic began to ravage the economy, but that’s what they ended up getting.
The Biden administration has pledged to help address the shortage, but established semiconductor players are positioning for a life after COVID. There has been no shortage of merger & acquisition activity in the sector during COVID. Let’s take a look:
💡Analog Devices took out Maxim Integrated in an acquisition in July 2020. The deal was worth $21 billion. Since July, $ADI has jumped 30% and $MXIM went on a 60% dash of its own. 💡In September, NVIDIA signed a deal to acquire English semiconductor business Arm Holdings. The $40 billion deal was one of the flashier figures in the industry. $NVDA has traded sideways since the deal, only up 0.3% since the start of September.
💡In October, AMD announced their plan to acquire Xilinx for $35 billion. $AMD is down 4% and $XLNX has gained 23% since October.
💡Last week, Micron Technology and Western Digital were reported to be exploring a joint deal to acquire Kioxia Holdings, a Japanese semiconductor player owned in part by Toshiba. Kioxia is reported to be focusing on an IPO instead. Regardless, $WDC has risen 39% and $MU has risen 26% since the start of 2021.
This shakeup in the semiconductor space might be a sign of things to come. Companies like Intel have announced plans to start making their own chips in America, rather than outsourcing them to industry leaders like TSMC and Global Foundry. Samsung is gearing up to try and take on the global leader in semiconductor: Taiwan Semiconductor. However, there’s no assurance that anybody will get close to their size or presence in the space.