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Cypress CEO talks about IoT, mergers, company plans

Posted: 07 Dec 2015     Print Version  Bookmark and Share

Keywords:Cypress  IoT  merger  Spansion  Bluetooth 

According to a recent interview given by T.J. Rodgers, Cypress's CEO, the semiconductor industry's merger spree could continue another two years. He also gave updates on his acquisition of Spansion and the company's initial success entering the Bluetooth market.

"In general, I think there is a merger mania, it starts once the first domino gets knocked over," said Rodgers. "People see someone else do it...[they] buy into their reasoning and feel that if they are not part of this they'll be left behind," he said.

Indeed, chip companies executed more than 18 M&A transactions over $100 million in the past year totaling $110 billion in value as of the end of October. For its part Cypress acquired Spansion for $4 billion earlier this year and made unsuccessful bids for both Atmel and ISSI.

The fever will continue "for a couple more years," said Rodgers.

T.J. Rodgers

T.J. Rodgers: Semicon industry merger mania to continue

"When I look at the available companies in the funnel, there's a bunch," said Rodgers. "Look at Japan Inc. [where] conglomerates are divesting their semiconductor divisions, that alone will take a couple years," he said.

The feeding frenzy has created a seller's market where "prices are going through the roof," Rodgers said, explaining why the ISSI and Atmel deals didn't work out. "We found two companies that would have fit with us for different reasons, and we bid on them and in each case another bidder [China investors for ISSI and Dialog for Atmel] claimed they got more value and paid more money than we were willing to pay," he said.

China's hunger to build its domestic semiconductor industry is fuelling aggressive bids, according to Rodgers, who believes long term China will become a chip powerhouse.

"The Chinese are paying high prices for chip companies now, which is great for us in the U.S. because it means the institutions we created are highly valued, but I haven't seen [China's bids] be highly successful yet," he said.

Nevertheless, Cypress has some of its chips made at Grace, SMIC and XMC, China fabs he called "high quality, clean and high yielding...I don't anticipate China will have a lot of trouble making [leading edge] silicon wafers," he added.

Ironically the chip industry's consolidation comes amid a boom time in Silicon Valley.

"When I come on to Highway 237 traffic right now is as bad as it was in 2000, plus there are buses carrying more bodies into the area, so employment looks good," Rodgers said. "Good engineers in Silicon Valley will always be able to find a job," he said.

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