Texas Instruments will buy NatSemi

Giant chip firm Texas Instruments (TI) has offered to buy National Semiconductor (NatSemi) for around $6.6 billion, underlining consolidation in the chip industry. NatSemi has agreed to be bought.

The offer is at a premium because TI will pay $25 for each share of NatSemi’s – that’s two thirds up on what NatSemi is worth – on the face of it.

The deal will go through because the boards of both companies have approved the move. That is, unless, the US government thinks it is a merger too far for two big US chip companies. It will probably go through on the nod.

It is the end of an era. National Semiconductor was one of the first chip companies to investigate outsourcing. It had a plant in Scotland, based on the savings it could make. It also dabbled in X86 technology from time to time. TI realised early on that wasn’t the way to go. Outsourcing was the way to go as NatSemi – it hates being shortened from National – realised early on.

Others followed where NatSemi pioneered. The combined power of both companies is bound to shiver some Asian timbers. TI is famous for being a favourite of the US government. Both companies realised some time ago that they weren’t going to compete with Intel and carved out a niche for themselves.

It is very unlikely that the US government will oppose the merger. The US chip industry is not what it was when America and the UK invented semiconductors and changed the world. More mergers and acquisitions are highly likely. ‰