El Segundo, Calif. – The recent merger and acquisition (M&A) activity in the automotive semiconductor market is reshaping the competitive landscape, according to a new report from IHS Technology. These include acquisitions by Qualcomm, Infineon Technologies, and On Semiconductor
The latest deal is Qualcomm Inc.’s announcement that it would acquire U.K.’s CSR PLC. This purchase is expected to grow Qualcomm’s market share in the automotive semiconductor market. IHS currently ranks Qualcomm at No. 43 in 2013 and CSR at No. 23 in 2013. Together, the combined companies would have ranked No. 19 in 2013.
More about expanding its market share than complementing its product portfolio, said IHS, the CSR acquisition makes Qualcomm the fourth-largest supplier of ASICs for automotive infotainment with a 10 percent market share. In 2013, Qualcomm ranked No. 11 with a market share of 2.7 percent, which remained unchanged in 2012 and 2011, said the market research firm.
This follows two announcements in August – Germany’s Infineon Technologies AG’s plan to acquire U.S.-based International Rectifier Corp. (IR), and On Semiconductor Corp.’s acquisition of Aptina Imaging Corp.
Thanks to the IR deal, Infineon strengthened its No. 2 rank, closing the gap on the No. 1 ranked Renesas of Japan, while helping the company diversify its product portfolio, said IHS. Infineon is behind Renesas by only $288 million, down from nearly $500 million before the acquisition, based on 2013 ranking data. Last year, automotive-related revenue growth for Infineon and IR was pegged at 11.7 percent and 15.6 percent, respectively, while Renesas experienced a 14.2 percent decline in automotive revenue primarily due to the declining exchange rate of the Japanese yen versus the U.S. dollar, significantly eroding its lead over Infineon, reported IHS.
Earlier this year, IR started initial production in its new state-of-the art ultra-thin wafer processing facility in Singapore, processing a variety of products including its latest generation of power MOSFETs and IGBTs. IR’s strong presence in low-power IGBT, power modules and power MOSFETs is expected to drive Infineon into the leading position in discrete ICs, and augment its position in the hybrid and electric vehicle segment, according to IHS. Although the acquisition won’t impact Infineon’s No. 2 position in analog ICs, it will help close the gap with the leading analog IC supplier STMicroelectronics.
On Semiconductor’s acquisition of Aptina moved On’s ranking up one position to No. 8, based on 2013 ranking data, as well as bolstered “a weak spot in On’s portfolio,” in addition to bringing the company closer to $1 billion in automotive semiconductors, said IHS. This acquisition makes On the leading supplier of CMOS imaging sensors, which are used in advanced driver assistance systems (ADAS) in vehicles. The adoption of ADAS is forecast to drive growth for automotive image sensors in the 10 percent range annually from 2013 to 2020.
“While these three M&A deals differ in their specific goals and benefits, all have the same strategic objective: expanding market share in the lucrative business for semiconductors used in automobiles,” said Ahad Buksh, analyst for automotive semiconductors at IHS, in a statement. “The automotive supply is adding new infotainment, communications and driver-assist functionality at a rapid pace, causing related semiconductor revenue to rise 5 percent to reach $26 billion in 2013. Suppliers are buying up competitors to gain scale in the market, to add key capabilities and to capitalize on established customer relationships.”
Market research firm Strategy Analytics also recently reported good growth for electronic components particularly for semiconductors and sensors thanks to enhancements to emissions control and safety as well as connectivity to the cloud and personal portable devices.
“Ongoing research and development to further improve conventional and electrified powertrains and safety enhancing advanced driver assistance systems (ADAS) is fueling growth for high performance processors, additional memory, highly integrated mixed signal ICs and sensor devices including radar and cameras,” said Chris Webber, vice president, Global Automotive Practice at Strategy Analytics, in a statement. “The growth opportunity will also be for semiconductors providing wireless connectivity to enable greater levels of future vehicle autonomy and to meet consumer expectations for seamless portable device usage and content delivery in the car,” he added.
Due to decades of investments to meet the specific requirements of leading customers, including high quality and strong service support, IHS expects automotive manufacturers to continue to maintain their long-term relationships with the established top semiconductor suppliers.