Semiconductor Industry News: Recent IPOs, Acquisitions, and Fallen Deals

While the semiconductor industry is stabilizing after the COVID-19 pandemic, manufacturers continue to face both oversupply conditions and shortages of components. Governments are promising large infusions of cash with the U.S. Chips Act and the European Chips Act. At the same time, trade tensions are threatening to derail existing and proposed deals.

 

Arm headquarters in Cambridge, England. Image used courtesy of Arm

 

Higher interest rates have also had an impact. Still, major players are not standing still. Here are three moves by Arm, Intel, and Macom that indicate an active and robust industry.

 

Arm Publicly Files for Initial Public Offering

Within the tech industry, the name Arm is as well-known as can be. Nearly 30 years after the release of the first Arm processor, the namesake company, founded in 1990, has announced its registration for an initial public stock offering (IPO).

Evolution of Arm processor architecture. Image used courtesy of Arm

 

Arm had humble beginnings in the 1980s as a joint venture between Acorn Computers, Apple Computer, and VLSI Technology. The company grew rapidly as a fabless processor IP designer. Due to the flexibility of its licensing and its reduced instruction set (RISC) architecture, Arm has become the go-to midrange CPU. In recent years, systems based on higher-performance Arm IP have challenged top-line processors. Currently, Arm processors fit in a broad range of markets, from small real-time microcontrollers for the Internet of Things (IoT) to smartphone processors, automotive applications, robotics, desktop platforms, and even servers.

However, the fate of Arm has not been certain over the last few years. The company was purchased by Softbank in 2016 for $32B. Then, in 2022, Nvidia dropped its proposed purchase of Arm after failing to secure regulatory approval. With the IPO, Arm hopes to regain control of its own destiny and gain the cash and clout necessary for further inroads into the high-end processor market.

 

Intel Terminates Tower Semiconductor Acquisition

In a step in the opposite direction, Intel has opted to cancel its $5.4B acquisition of Tower Semiconductor. In February 2022, Intel announced its intention to purchase the Israeli contract chip manufacturer as a part of the initiative to expand and modernize Intel’s foundry business, Intel Foundry Services (IFS). By expanding its contract foundry business, Intel is hoping to bring high-end fab capabilities back to North America and compete with the likes of Taiwan Semiconductor Manufacturing Company (TSMC) and GlobalFoundries.

 

Tower Semiconductor's analog process technologies. Image used courtesy of Tower Semiconductor

 

Intel and Tower Semiconductors mutually agreed to terminate the acquisition after failing to receive all of the necessary regulatory approvals. Reportedly, the deal was a casualty of the ongoing trade tensions between the U.S. and China, not an indication that Intel is pulling back on fab investments.

Intel has also been in the expansion news lately, with its major investment in Magdeburg, Germany. The cancelation of the Tower deal looks to be more of an anomaly than a trend.

 

Macom Acquires Wolfspeed's RF Business

Macom, a 70-year-old manufacturer of high-speed/high-power semiconductors for data center, telecommunications, industrial, and defense applications, is expanding its RF business by acquiring Wolfspeed's RF business portfolio for $125 million in cash and stock. This acquisition will not impact Wolfspeed's recently publicized plans for semiconductor expansion in Germany. 

 

Macom RF products. Image used courtesy of Macom

 

The acquisition includes a 100 mm gallium nitride (GaN) wafer fab in North Carolina. Wolfspeed will take approximately two years to remove equipment from the fab that is not included in the deal, after which the fab and its 280 employees will transfer to Macom. The transaction also includes design teams and design assets in Arizona, California, and North Carolina and back-end production operations in California and Malaysia.

This acquisition complements Macom's strategy to grow its GaN foundry services and original semiconductor design and fab. Wolfspeed will use the sale as a vehicle to increase focus on its power device and materials business lines.

 

Why the Arm IPO Dominates Industry News 

The Arm IPO stands to be the largest hardware IPO this year and will likely have the greatest overall impact of the three deals. Following Softbank’s IoT-focused acquisition of Arm in 2016, Arm has made great strides in that market with its Cortex-M line of advanced low-cost, low-power RISC microcontrollers. Now, Arm's higher-end offerings, such as the Cortex-A and Cortex-X designs, are venturing into more conventional CPU markets. Arm IP has also become the go-to for integrated co-processors in newer field programmable gate arrays (FPGAs) and other complex components.

However, competition has emerged in the form of the open-source RISC-V, which has backing from major industry players. Although Arm has a strong hold on the market, its proprietary design requires licensing fees; RISC-V does not. The failure of the Nvidia purchase may have taken some of the completive pressure off Arm, and a successful IPO will likely put Arm in a position of even greater influence in the microcontroller and CPU arenas.