Renesas Electronics Corp, the second-biggest supplier of semiconductors used in cars, plans to acquire Integrated Device Technology Inc (IDT) for about US$6.7 billion to expand beyond the automotive sector into data centers and communications devices.
The Japanese company is to pay US$49 a share, it said in a statement, about a 16 percent premium to the US company’s Monday close.
That propelled Renesas’ stock as much as 7.8 percent higher in Tokyo, its biggest intraday jump in six months.
Renesas, which gets more than half of its sales from auto-sector clients, has signaled plans to make acquisitions beyond the industry to expand into fields from healthcare to aerospace. I
San Jose, California-based IDT gets most of its revenue from products for high-performance computing and consumer applications, including clock-timing, power management and radio-frequency devices.
“There’s little overlap between their product portfolios, so it’s a strategically sound move for Renesas,” Bloomberg Intelligence analyst Masahiro Wakasugi said. “But it does seem like the price is a little high.”
Morgan Stanley, Bank of America Merrill Lynch and Mizuho Securities acted as financial advisers to Renesas, while JPMorgan advised IDT.
Renesas can use cash on hand and bank loans to pay for the acquisition and has no plans for an equity fundraising, CEO Bunsei Kure told reporters in Tokyo.
The company plans to get regulatory approval and close the deal by the end of June next year.
“IDT has been focusing on products that have longer life spans, higher reliability and lower volatility,” Kure said. “Even though we operate in different areas, our core strategies are very similar.”
Renesas is second only to NXP Semiconductors NV in automotive market share.
Last year, the Japanese company paid US$3.2 billion for Intersil Corp, a US chipmaker whose product lineup includes semiconductors that manage battery voltage in hybrid and electric vehicles.
In June, chief financial officer Hidetoshi Shibata said Renesas’ next purchase would focus more squarely at cutting overlapping legal, administrative and information-systems expenses.
The acquisition of IDT would result in more than US$80 million of cost savings two years after the deal’s closing, Renesas said on Monday.
One of the biggest hurdles to major acquisitions is Renesas’ ability to absorb the target, Shibata said.
Renesas, which was formed in 2010 through the merger of NEC Corp’s chip unit and a money-losing venture between Hitachi Ltd and Mitsubishi Electric Corp, has about 20,000 workers. Intersil had little more than 1,000 employees and IDT has about 1,700.
IDT posted an adjusted net income of US$124 million on revenue of US$843 million for the year ended April 1.
Computing accounted for 40 percent of the company’s revenue in the latest quarter, while the communications and consumer segments contributed 29 percent and 20 percent respectively.
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
’WHITE BOX’: The open platform would give local firms access to Cisco’s cloud-based mobile network to develop 5G telecom equipment and tap into the global market The Ministry of Economic Affairs (MOEA) yesterday introduced a new 5G “open lab” in collaboration with US-based information technology and networking giant Cisco Systems Inc to address the rapidly growing “white box” 5G networking equipment market. The open lab will be a platform where Taiwanese manufacturers can access Cisco’s cloud-based mobile network to develop their own 5G telecom equipment, such as small-cell base stations, network switches, modems and Internet of things (IoT) devices, a ministry statement said. The open platform would allow Taiwanese manufacturers to tap into the lucrative 5G telecom equipment market, which was previously monopolized by Nokia Oyj, Ericsson AB
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to