Mergers and acquisitions in the chipmaker industry have been cheered by investors lately, as evidenced by the impressive performance of stocks like Skyworks Solutions Inc. (SWKS), Avago Technologies Limited (AVGO), RF Micro Devices Inc. (RFMD) and TriQuint Semiconductor, Inc. (TQNT). Each of these stocks has more than doubled over the past year.
These companies make radio frequency (“RF”) chips, with applications in smartphones and numerous other products. These chips are used by mobile giants including Apple (AAPL) and Samsung.
RF chipsets facilitate mobile devices to support several frequency bands, from the latest 4G LTE to old 2G networks. A single chip that can support many bands creates time and cost savings for manufacturers. Chipmakers are enjoying a robust performance as growing adoption of 4G LTE and the continued strength in the RF content market drive growth in the major end-markets of these companies.
The semiconductor industry has been witnessing a major wave over the last 12 months, as chipmakers attempt to achieve scale, expand addressable markets and extend cross-selling opportunities by consolidating their operations.
Among the major deals, Avago Technologies completed its $6.6 billion acquisition of LSI and $309 million acquisition of PLX Technology, to explore the market for chips used for storage devices and other wireless and wired products.
RF Micro Devices and TriQuint are merging in order to boost their market share in the RF chip industry. The combined entity is set to become the market’s leading chipmaker with over $2 billion in annual revenue. Its portfolio will dominate the wireless market, as well as markets such as aerospace, network infrastructure and defense.
Skyworks Solutions is also set to conclude a joint venture with Panasonic, wherein they will make a highly sophisticated RF chip that allows dense packing of frequency bands for smartphones, which will prove to be vital as smartphone-makers load up on increasingly complicated features.
As the transition to LTE drives demand across the board, from infrastructure to handsets, these chipmakers look well set to capitalize on the strong growth opportunities that the market offers.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment