© Texas Instruments Components | April 05, 2011

TI playing with the big boys now

Texas Instruments of the United States said it will buy National Semiconductor Corp. for about USD 6.5 billion. The company will pay USD 25 a share in the all-cash transaction. But what does it actually mean?
Based on final results from the year 2010, the National acquisition would make Texas Instruments the world's third largest semiconductor company. This would allow Texas Instruments to rise one place in the rankings from fourth place, supplanting Japan's Toshiba Corp.

The combined companies would have revenue of USD 14.5 billion, compared to USD 13 billion for Toshiba, which would fall to fourth place. Texas Instruments will still trail No. 2 semiconductor supplier Samsung Electronics Co. Ltd. of South Korea by a wide margin as Samsung’s 2010 revenue amounted to USD 27.8 billion. National in 2010 ranked 37th among all semiconductor suppliers.

The National acquisition also will expand Texas Instruments' leadership in the global market for analog integrated circuits. TI in 2010 earned USD 6.4 billion in analog IC revenue, accounting for 13.7% of global market revenue, and making it the world’s largest supplier. With the addition of National's USD 1.4 billion in sales, Texas Instruments’ total analog revenue would rise to USD 7.8 billion, giving it a 16.8% share of the market. This would expand Texas Instruments' lead over No. 2 supplier STMicroelectronics to 8.8 percentage points, up from 5.7 points before.

With in the analog segment, the acquisition will particularly bolster Texas Instruments lead in the market for voltage regulators. Texas Instruments was the leading voltage regulator supplier in 2010, with USD 1.7 billion in revenue and a share of 18.1%. National was the third largest supplier, with USD 758 million in revenue and 15.2% in revenue. With the acquisition, Texas Instruments' voltage regulator revenue would amount to USD 2.4 billion in 2010, giving it a 26.5% share of the market.

Voltage regulators represent a segment of the semiconductor market that delivers consistent, above-average annual growth.

The global voltage regulator market expanded by 36.3% in 2010 to reach USD 9.1 billion, up from USD 6.7 billion in 2009. This represented larger growth than the total semiconductor market, which expanded by only 32.1% for the year.

During the past nine years, from 2001 to 2010, the global semiconductor market has expanded by 93.1%. In contrast, the voltage regulator segment has expanded by 169.4%, rising to USD 9.1 billion in 2010, tripling from USD 3.4 billion in 2001.

The acquisition also will bolster Texas Instruments' dominant position in another segment of the analog market: analog/comparator integrated circuits. Texas Instrument in 2010 earned USD 932 million in analog/comparator revenue, giving it a 24.6% share of the market.

With the addition of National's USD 364 million in sales, Texas Instruments' revenue would rise to USD 1.3 billion and its share would increase to 34.2%.
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