Latest news, after nearly half a year of acquisition journey, the Japanese semiconductor giant Renesas Electronics has finally successfully brought the electronic design software industry giant Altium into its fold.
Renesas Electronics acquires Australian software listed company
On August 1, 2024, Renesas Electronics officially announced the successful completion of the acquisition of Altium. The final agreement for the acquisition was announced on February 15, 2024.
Public information shows that Altium, founded in 1985, is one of the world's earliest providers of printed circuit board (PCB) design tools. Altium's PCB design software added the world's first digital platform for designing and implementing electronic hardware, Altium 365, which achieved seamless collaboration throughout the entire PCB design process.
With the completion of the transaction, Altium has now become a wholly-owned subsidiary of Renesas Electronics. Altium CEO Aram Mirkazemi has taken on the role of Senior Vice President and Head of Software and Digitalization at Renesas Electronics, while also serving as CEO of Altium.
The acquisition of Altium by Renesas Electronics took effect on July 31 based on an arrangement plan ("the Plan") under Australian law. Under the terms of the Plan, Renesas Electronics' indirect wholly-owned subsidiary, Renesas Electronics NSW Pty Ltd, acquired all of Altium's outstanding shares at a cash price of AUD 68.50 per share, with a total equity value of approximately AUD 9.1 billion (approximately JPY 887.9 billion, calculated at an exchange rate of 97 yen per AUD 1). Renesas Electronics funded the acquisition through bank loans.As part of the implementation of the plan, Altium's common shares will be suspended from trading on the Australian Securities Exchange at the close of trading on July 19, 2024, and Altium will be officially delisted from the Australian Securities Exchange's official list at the close of trading on August 2, 2024.
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Renowned Electronics Army
This year, Renesas Electronics, the "king of acquisitions," continues to implement the "buy, buy, buy" strategy. Looking at its acquisition route, in 2017, Renesas Electronics acquired Intersil, headquartered in Milpitas, California; in 2019, it acquired Integrated Device Technology (IDT), a supplier of analog-mixed signal products headquartered in San Jose; in 2021, Renesas Electronics acquired Dialog Semiconductor, headquartered in the UK, and Celeno, a Wi-Fi solution provider; in 2022, it acquired Steradian Semiconductors Private Limited (Steradian), a fabless semiconductor company providing 4D imaging radar solutions, and Reality Analytics, Inc. (Reality AI), an excellent supplier of embedded AI solutions; in 2023, it acquired Panthronics AG, a fabless semiconductor company focusing on high-performance wireless products.
In 2024, Renesas Electronics not only acquired the aforementioned Altium, but the company previously announced that it has completed the acquisition of Transphorm, a global supplier of gallium nitride (GaN) power semiconductors. Renesas Electronics stated that the acquisition of Transphorm will provide the company with internal GaN technology, thereby expanding its business scope in the rapidly growing markets of electric vehicles, computing (data centers, artificial intelligence, infrastructure), renewable energy, industrial power, and fast chargers/adapters. After the completion, Renesas Electronics will immediately begin to provide GaN-based power products and related reference designs to meet the growing demand for wide bandgap (WBG) semiconductor products.
The industry believes that for the semiconductor industry, mergers and acquisitions are an important means for the industry to obtain innovative new technology resources and emerging talents, and to enhance market competitiveness. The series of acquisitions made by Renesas Electronics will help it reduce its dependence on the domestic market and accelerate its expansion overseas. The company aims to develop a diversified route, expanding from the automotive field to the fields of data centers and consumer devices, strengthening and consolidating its market position, and seizing the new opportunities in the growing market.Renesas Electronics Aims for a Market Value of $100 Billion
Public information indicates that Renesas Electronics was formed by the merger of the chip divisions of NEC, Hitachi, and Mitsubishi Electric, renowned Japanese enterprises. The company became the world's third-largest chipmaker in 2009, with sales just behind Intel and Samsung Electronics.
In recent years, to achieve strategic goals, Renesas Electronics has adopted a series of measures such as mergers and acquisitions, expansion of production, and cooperation. The company's previous activities include: opening a 300mm wafer factory in Kofu specifically for the production of power products; adding a new SiC production line at the Takasaki factory; reaching an agreement with Wolfspeed to ensure a stable supply of SiC wafers for the next 10 years; and jointly building a packaging and testing factory with India's CG Power and Thailand's Stars Microelectronics, with a total investment of 76 billion rupees, and a daily production capacity of about 15 million chips.
Renesas Electronics' latest financial report points out that in the second quarter of 2024, the company achieved revenue of 358.8 billion yen (about 16.922 billion RMB), a year-on-year decrease of 2.7%, and a sequential increase of 2.0%; the profit attributable to the owners of the parent company was 96.7 billion yen (about 4.561 billion RMB), a year-on-year decrease of 22.3%, and a sequential decrease of 9.2%; EBITDA was 132.8 billion yen (about 6.263 billion RMB), a year-on-year decrease of 16.2%, and a sequential decrease of 1.0%.
According to information, Renesas Electronics' market value has reached 35 billion US dollars, and the company plans to increase its market value to around 100 billion US dollars by 2030. In addition, the industry says that Renesas Electronics' proactive measures will help Japan to promote the strategic goal of reviving the semiconductor industry.Semiconductor Industry Accelerates into the Integration Phase
The global semiconductor industry has experienced a relatively long downturn cycle. Since the beginning of this year, the industry's prosperity has been continuously recovering and accelerating. Currently, AI artificial intelligence is expected to drive a new round of the semiconductor industry cycle upward. Faced with this new cycle, industry insiders have pointed out that "the value of some assets is expected to be re-evaluated in the future, and the industrial policies and support measures for mergers and financing are increasing. Whether it is policy orientation or industrial environment, it is currently the best time for mergers and integration."
The active pace of semiconductor company mergers and acquisitions reflects that the semiconductor industry is entering a fast track of mergers and integration. In addition to the aforementioned acquisition of Altium by Renesas Electronics, companies such as ASE, ZhenDun Group, and Unisplendour have joined the integration process and announced new acquisition dynamics.
Infineon's two factories were successfully sold to ASE: On August 1, 2024, Infineon announced the completion of the sale of its two backend manufacturing factories to two wholly-owned subsidiaries of ASE. One of the factories sold is located in the Philippines' Metro Manila, and the other is in Cheongju, South Korea.
This move will help ASE expand its power chip module testing and wire bonding packaging in automotive and industrial automation applications. ASE stated that the existing employees will be responsible for the operation and further development of the two factories to support multiple customers.These two transactions can increase the production capacity of ASE Technology and meet the subsequent order demands of Infineon. It is reported that ASE Technology has also signed a long-term supply agreement with Infineon. According to the agreement, Infineon will continue to receive the services previously established and the services of new products to support its customers and fulfill existing commitments.
Unigroup invests 15 billion yuan to acquire 30% of H3C's equity: Recently, Unigroup announced that it will invest $2.143 billion (approximately 15.18 billion yuan) to acquire 30% of H3C's equity. This transaction involves Unigroup, H3C, and HPE, three giants, and is expected to be completed by the end of August.
Unigroup acquired 51% of H3C's equity from HP in 2016 and became its controlling shareholder. The acquisition plan was initially adjusted several times due to financial pressure and regulatory approval, and finally decided to complete the transaction by paying cash. Unigroup will raise funds for the acquisition through its own funds and bank loans. The company stated that although the asset-liability ratio will rise sharply after the transaction is completed, relying on H3C's profitability and future diversified equity financing plans, Unigroup is confident in dealing with debt pressure.
Financial data show that H3C's operating income in 2022 and 2023 was 49.81 billion yuan and 51.939 billion yuan, respectively, and the net profit attributable to the parent company was 3.731 billion yuan and 3.411 billion yuan, respectively. As a leading domestic ICT company, H3C's stable profitability is crucial to Unigroup. Last year, H3C contributed 65% of Unigroup's total revenue. After this acquisition is completed, Unigroup's profitability will be further enhanced.
ShenDun Group temporarily suspends Curious equity exchange, refocuses on advanced packaging IP: In March this year, chip design company ShenDun Group announced the acquisition of Japanese IP supplier Curious. At that time, it was decided that ShenDun would issue new shares as the transaction consideration to obtain 60% of the issued shares of Curious, with an estimated transaction amount of about 525 million yuan. However, on July 26, ShenDun Group announced that it would temporarily suspend the Curious equity exchange while maintaining the principle of maximizing shareholder interests.Shield Group stated that, based on the company's consideration of its future overall business and operational strategy, it plans to prioritize the development of business in advanced high-end packaging, processes, and related IP architecture. Therefore, under the premise of safeguarding the rights and interests of shareholders as the highest principle, it will temporarily suspend the share transfer plan with Curious. The company will continue to pay attention to the growth momentum of the Japanese market and re-evaluate the next phase of cooperation plans at the appropriate time.
Shield Group CFO Li Yiping said that the group has just obtained the IP authorization from Arm, which symbolizes the company's focus on advanced processes. After completing its own capabilities, the company will cooperate with international giants. Curious in Japan is a non-core IP, so in the case of limited resources, the plan is to refocus the product line.
Conclusion
At present, the semiconductor industry is at the starting point of a new cycle, with mergers and integrations taking place at all levels of the industry chain, absorbing new advanced technologies and consolidating existing resource systems. Industry insiders say that looking at the development history of foreign giants, many semiconductor companies have gone through a large number of mergers and acquisitions to become leading companies. In contrast, the current number and scale of domestic semiconductor companies are quite high, and homogenization in some fields is also high. From the development law of the semiconductor industry, the top companies will eventually occupy the vast majority of the market share. The current fragmented situation in the country is definitely temporary, and platform companies will eventually become the mainstream. For the growth of semiconductor companies, mergers and acquisitions are an inevitable path.
According to previous statistics from Global Semiconductor Observation, this year, there has been a frequent phenomenon of mergers and acquisitions in the fields of EDA, data centers, AI acceleration chips, advanced packaging, and power semiconductors. From this perspective, the semiconductor market has actually gone through a process of ups and downs, from being hot, calm, to now slowly becoming lively. With the drive of AI, new energy vehicles, and other fields, semiconductor companies are actively taking relevant measures to seize the new opportunities brought by the market, which will help the semiconductor industry to accelerate into a new cycle.
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