by Dan Mandell | 06/06/2019
After a brief lull in semiconductor M&A, Infineon Technologies has announced it has signed a definitive agreement to acquired Cypress Semiconductor for an enterprise value of €9.0 billion (~$10B). Infineon has increased its market share in the embedded microcontroller (MCU) market by nearly 40% through the merger while at the same time establishing a foothold in the marketplace for system-on-chips (SoCs). The two companies are similar in terms of their target industries with automotive being the prime source of revenues, although the addition will be particularly helpful in expanding Infineon’s dealings in consumer electronics, energy, industrial automation, and medical markets. With the acquisition, Infineon has also become a much more serious player in the Internet of Things.
So what did Infineon just buy? Cypress was a leading supplier of embedded MCUs and SoCs with innovative solutions incorporating programmable logic and short-range wireless technology. The company also has a wide portfolio of USB devices, power management ICs, Memory, and sensing technologies to support its semiconductors. Cypress's WICED (Wireless Internet Connectivity for Embedded Devices) platform features SDKs and turnkey hardware solutions from partners to enable Wi-Fi +/ Bluetooth (Basic Rate, Enhanced Data Rate and Bluetooth Low Energy) system designs. The company’s most recent product launches have focused on enabling enhanced hardware-level security as well as expanding support for BLE and Bluetooth mesh networking.
Enhanced on-chip programmability and board real estate has been of particular interest for Infineon lately as furthered by its ongoing collaboration with Xilinx and its FPGA SoC offerings. It was only a matter of time until Infineon ascended to higher-level computing applications requiring a SoC device. With a SoC, Infineon can take greater advantage of its RF and sensing technologies by providing more deployment flexibility as well as a higher level of hardware integrations off the shelf – an increasing requirement for many projects. With the acquisition, Infineon also nets itself a mature software platforms and toolkits (e.g., PSoC Creator/Designer/Programmer, WICED), which are critical for embedded development and design decisions.
Overall, the acquisition is an overdue yet valuable step forward for Infineon. Cypress has customers in many of the same industries and geographies that Infineon does but their embedded processor offerings are technically very different and should not cause for much, if any, cannibalization of business opportunities. Infineon has also solidified its positioning in the MCU market ahead of STMicroelectronics and Texas Instruments while opening new technological possibilities using SoCs. A challenge for Infineon will be fostering Cypress’ software development environments and developer community, which are quite different from the company’s past software experience. With a clean and quick integration of the companies, Infineon could accelerate its growth in new automotive subsystems and high-growth IoT market.
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