On April 4th, Texas Instruments (TI) announced its acquisition of National Semiconductor (National) for $6.5 billion. The acquisition brings together the development strengths of National with the global sales force of TI. According to TI and National executives, the deal will provide a strong synergy for analog products that will benefit the combined corporations.
TI already has a portfolio of 30,000 analog devices. National will contribute a portfolio of 12,000 analog products, which TI believes will give them greater penetration into the industrial power market. TI in 2010 made $6.0 billion in revenue from analog products. National had analog revenues in 2010 of $1.6 billion. Once the acquisition is complete, National will be incorporated into TI’s analog business segment. TI in its 2010 fiscal year had 11% of revenue in the US, 64% in Asia, 13% in Europe, and 10% in Japan. TI has analog and power management products alongside its embedded and wireless businesses. Meanwhile, National Instruments in its 2010 fiscal year had 24% of revenue in the US, 54% in Asia, 9% in Japan and 22% in Germany.
As in all acquisitions, questions arise surrounding the outcome. Product overlap between the two companies’ portfolios no doubt exists. Ultimately, some products may be scrapped due to overlapping roadmaps and vertical markets. This will lead to fewer products, and potentially less need for the manpower to sustain these product lines. The research and development strategies of the two firms will have to coalesce into a focused product roadmap, which will take time to develop. The Go-to-market strategy of the combined company will need detailing as well. All of these processes will require intensive attention from the management team and distract from other operational activities. However, assuming TI effectively incorporates National, VDC believes this will give them a stronger position versus competitors like STMicro and Analog Devices.