US handset chip developer Qualcomm Inc’s US$3.2 billion acquisition of Atheros Communications Inc will have a mixed impact on Taiwan’s semiconductor and handset supply chains, with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Advanced Semiconductor Engineering Inc (ASE, 日月光) benefiting the most, analysts said.
TSMC, the world’s biggest contract chipmaker, and ASE, the world’s biggest chip packager, are likely to benefit from the deal announced on Wednesday because they account for about 10 percent and 7 percent of Qualcomm’s sales respectively, Credit Suisse analyst Randy Abrams said in a report on Friday.
Siliconware Precision Industries Co (SPIL, 矽品精密), the world’s No. 2 chip packager, however, is poised to face some risks as it has sales of less than 1 percent to Qualcomm, compared with a share of about 5 percent for Atheros, Abrams said.
Atheros is a leading player in wireless LAN chips and Ethernet controller chips, which are designed to connect computers wirelessly to the Internet. The acquisition of Atheros is expected to help Qualcomm accelerate integration of Atheros’ connectivity portfolio into its own baseband and application processors, paving the way for its future expansion into PCs, tablets and networking.
However, Qualcomm’s expanded product portfolio and market segments could usher in more competition with Taiwan’s MediaTek Inc (聯發科), the nation’s largest handset chip designer, and other baseband vendors in Asia, analysts said.
Apart from MediaTek, two other chip designers, Taiwan’s MStar Semiconductor Inc (晨星) and China’s Spreadtrum Communications Inc (展訊), could also face intensified competition from Qualcomm, Deutsche Bank analyst Jessica Chang (張幸宜) said.
“This would be a more direct negative for MediaTek given Qualcomm is a major competitor to MediaTek on the WCDMA and smartphone product segments, the focus of MediaTek going forward,” Chang said in a research note on Wednesday.
As for Taiwanese wireless networking chipmakers Realtek Semiconductor Corp (瑞昱) and Ralink Technology Corp (雷凌), Chang said the Qualcomm-Atheros deal would have mixed impacts on them.
On the one hand, the deal could strengthen Qualcomm’s handset solution and thus offer limited room for Realtek and Ralink to expand in the handset supply chain, she said.
On the other hand, Realtek and Ralink could have better opportunities in the PC WLAN area as, for the foreseeable future, Qualcomm will be less focused on this field, she added.
Shares of TSMC closed at NT$72.5 on Friday in Taipei trading and have risen 2.11 percent in the first week of this year, compared with the TAIEX’s 2.12 percent fall.
Shares of ASE closed at NT$31.95 on Friday and they have dropped 5.33 percent so far this year, while those of SPIL, which closed at NT$33 on Friday, are down 5.71 percent over the same period.
MediaTek shares have fallen 6.59 percent this year and closed at NT$390 on Friday, compared with MStar’s 9.96 percent decline to NT$253. Realtek’s shares have edged down 0.57 percent this year to NT$69.20, while Ralink shares were up 3.41 percent to NT$106 on Friday, the stock exchange’s data showed.
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