Chip company mergers and acquisitions reach $80 billion

intel_ireland_semiconductor_chip_fab_300mm_waferInterest in writing cheques for chipmakers through mergers and acquisitions (M&As) is expected to pick up.

Chipmakers have already announced over $80 billion worth of M&As in 2015.

Chipmakers are acquiring peers to expand capacity and capabilities ahead of an explosion in demand for all kinds of semiconductors necessitated by the Internet of Things.

Hidetoshi Shibata, chief financial officer of Japan’s Renesas, said that the days of chip companies growing through their own development are over and the only way to get bigger is by buying a rival.

The biggest buyers are the Chinese whose aggressive cheque book is pushing the value of merger targets beyond rivals’ reach. The leader is Tsinghua Unigroup which has spent $10 billion on M&As over the past two years and plans for almost $50 billion more over the next five.

Many Chinese deals are by privately held parties, such as Tsinghua, which this month earmarked almost $13 billion for a memory chip factory. In April, a group of Chinese investors agreed to buy US smartphone camera chip maker OmniVision Technologies for about $1.9 billion in cash.

More consolidation among companies making chips for memory and power management is expected.

Analysts think most of the Chinese buyouts are part of the plans of an emerging superpower to become self-sufficient, by controlling all aspects of a business and developing products to rival established players.