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TEXAS Instruments will acquire competitor National Semiconductor for US$6.5 billion.
Both companies are leaders in analogue semiconductors. National will become part of TI’s analogue segment.
The acquisition is expected to benefit TI’s bottom line, while the National part of the business will be able to take advantage a much larger sales force and access more customers.
National Semiconductor’s headquarters will remain in Santa Clara, California.
According to National Semiconductor’s CEO Don Macleod, the two companies’ capabilities are complementary.
"TI has much greater scale in the marketplace, with its larger portfolio of products and its large global sales force. This provides a platform to enhance National’s strong and highly profitable analogue capability, power management in particular, leading to meaningful growth," said Macleod.
TI has 30,000 analogue products, extensive customer reach, and cutting edge manufacturing capabilities, while National has a portfolio of 12,000 analogue products, manufacturing operations in Maine, Scotland and Malaysia, and a strong position with customers in the industrial power market.
The market for analogue semiconductors was $42 billion in 2010. TI is the market leader with 2010 analogue revenue of $6.0 billion, or 14 percent of the market. National’s revenue in calendar year 2010 was about $1.6 billion, or 3 percent of the market.
Don Macleod (CEO, National Semiconductor) seals the deal with Rich Templeton (chairman, president, CEO, Texas Instruments).
This acquisition is expected to increase TI’s lead on the market. While the recent Japan earthquake and tsunami did present some disruption for TI’s operations in that country, it has largely recovered.
According to analysts at IHS iSuppli, Texas Instruments will be come the world’s third largest semiconductor company, overtaking Toshiba.
However, the combined TI will still be a wide margin behind Samsung Electronics, which currently holds second place with a revenue of US$27.8b.
In the analogue integrated circuits market, Texas Instruments will expand its lead over the number 2 supplier STMicroelectronics. It will especially boost its lead in the market for voltage regulators.
Voltage regulators represent a segment of the semiconductor market that delivers consistent, above-average annual growth.