In a period of just over six weeks, two of the three largest semiconductor acquisitions ever have been announced, though regulatory risks remain.
The semiconductor industry is experiencing historic consolidation, thanks to a wild rally in the stock market. In the past six weeks, two of the biggest three acquisitions ever in the chip industry have been announced, after AMD said on Tuesday that it’s buying Xilinx for $35 billion. Last month, Nvidia agreed to acquire Arm from SoftBank in a deal worth $40 billion. The only deal keeping those two from being the largest in history was Avago’s $37 billion purchase of Broadcom, which was announced in 2015. The company assumed the name Broadcom. Both Nvidia and AMD are taking advantage of run-ups in market value to bulk up in the data center, where cloud deployments and new workloads are driving hefty spending. Nvidia shares are up 162% in the past year, while AMD’s stock has climbed 141%. In the universe of large-cap tech companies, only software vendors Zoom and Shopify have performed better. AMD’s purchase of Xilinx is all stock, and Nvidia is paying mostly stock to SoftBank for Arm, along with some cash. “They both are using their stock appreciation to conduct M&A,” said Matthew Bryson, an analyst at Wedbush Securities who has the equivalent of a buy rating on AMD and Nvidia. “Technology within the data center market is diversifying and I think both of these companies believe they can better serve that market with a fuller range of solutions.
