MediaTek Inc (聯發科), the nation’s biggest mobile phone chip designer, yesterday said it would acquire local wireless chipmaker Ralink Technology Corp (雷凌) via a share swap to boost its technological capability in supplying advanced smartphone chips.
The move marks the latest investment by the Hsinchu-based chip company one day after announcing that it would invest US$20 million in a Chinese touch sensor maker, Goodix (匯頂科技), via its subsidiary Gaintech Co Ltd.
The acquisition of Ralink would help MediaTek “enhance its deployments in the smartphone area, which will be the main growing sector in the next few years, and we believe smartphones will need high-end Wi-Fi technological support in the future,” MediaTek president Hsieh Ching-jiang (謝清江) said.
Eric Chen (陳慧明), a semiconductor analyst with Daiwa Capital Markets, said MediaTek’s moves follow similar steps taken by its bigger rivals, Qualcomm and Broadcomm, to strengthen their mobile phone chip technological capability through mergers and acquisitions (M&As).
“Clearly this M&A will further strengthen MediaTek’s total solution for the low-end smartphone IC market with [the acquisition of] higher embedded Wi-Fi solutions,” Chen said in a research note yesterday.
It would also give “Mediatek a wider range capability and business opportunity in China’s three-in-one [integration of] networking market, Internet IC market and tablet PC IC market,” Chen said.
Besides, the deal would help MediaTek expand its products to notebook computers, tablet devices and other consumer electronics, of which Ralink holds a significant market share in terms of Wi-Fi chips, Hsieh said.
However, MediaTek does not plan to offer new chips for tablet devices, Hsieh said.
Based on the deal, one MediaTek share would be exchanged for 3.15 shares of Ralink — a price that Chen said would mean a very small premium.
MediaTek’s share price rose 3.14 percent to NT$328.50 yesterday, while Ralink’s rallied close to its 7 percent daily-limit at NT$103.50.
Chen maintained his sell rating on MediaTek, saying that the synergy would take a long time to realize.
After the transaction, Ralink would own a 4.58 percent stake in MediaTek. The deal is scheduled to wrap up in October.
Separately, Hsieh said the fatal earthquake that hit Japan last week did not seem to have a significant impact on the company’s operation and that it was keeping its first-quarter outlook intact.
Revenues are expected to decline by 7 to 14 percent this quarter from last quarter’s NT$22.68 billion (US$767.4 million), the company told investors last month.