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Acquisitions, Semiconductors, and Bracketology

The phone rang (buzzed and played some repulsive electronic generated tune) and I realized it was from a former coworker. I picked it up and the conversation quickly moved to the reason for the call: my company’s been acquired by “so and so”, what do you think?

My response was one word, “Worry”.

With all of the mergers, acquisitions, and spinoffs going on in the world, I’ve been thinking about writing an article on this subject for several years. Seeing how 2015-2016 were the biggest years of acquisitions, I thought now might be a good time. However, there really is no good time, as this trend will continue now that accountants control businesses that were made successful by engineers. How does this affect engineers? Simple, your fate is being decided right now on a golf course near you; or more likely, a golf course in the Far-East. Remember technology was only invented here in the US. Technology is made profitable by shipping control overseas to countries that were freed militarily with American lives so they can take us over financially without ever firing a single shot.

The number of semiconductor companies will eventually whittle down to a single company that we will call BIG. This scenario will be much like a March Madness college basketball bracket. It will be similar to the fate of the basketball players whose season ends in devastation as everything they worked for goes up in one event just like the layoffs that follow an acquisition or merger. It will be different in the fact that instead of going on spring break in alumni-furnished condos or sponging off other students in the school because “you’re famous”, engineers will be introduced to a new way of life including food stamps, unemployment benefits, and a realization that salaries have eroded to the levels of the 1980’s.

Meanwhile, CEOs will be lobbying Congress and the President saying H1B VISAs are necessary due to a lack of available talent. This will confuse you as you send resume after resume with little or no response. Responding to an inquiry is so 1990’s. That level of professionalism also was abandoned with the dawning of the new century. Maybe I should patent that keyboard with an “Ignore” button and the word “like” written on the space bar for millennials. Seems to me it would be in high demand.

Getting back to bracketology, here’s a blank bracket for you to fill out. As a hint for getting started, here are some of the upcoming predictions on mergers and acquisitions. Seems even Wall Street is looking into this bracket method of assessing the semiconductor industry. If you have read my past articles you know that I have to put a legal disclaimer on everything to protect myself from lawyers. While Wall Street can boldly act and predict without recourse, an individual cannot without fear of retaliation. Be it known that I’m just repeating an article and not offering any legal advice linked to investment or otherwise.

So let’s look at this bracket for a bit. In theory, it’s the reverse of the big bang theory as everything implodes on itself resulting in one big monopoly. Forget the Sherman antitrust law. That only applied in the 1900s like courtesy in responses to resume submittals. Most notable to accountants and investors is the overall cost savings which here is listed as “layoffs”. Of course, the higher the number of layoffs, the more successful the effort. All in the name of profit as company loyalty is also so last century.

One must realize this bracket is not without its faults. For those outer levels on the fringes, realize that they are dwindling in numbers as investors believe that software is the only logical invention worth funding. Everything in hardware has been invented already. That is a safe assumption as it’s from the 1800s when the patent office was almost shut down because it was believed everything that could be invented was invented. The 1800’s were the period when workers had no rights or recourse unlike the 1900s where workers were coveted. Accountants overlook the 1900s as it affects the numbers. Currently, investors keep funding companies that put more cars on the highway (create more bits and bytes by funding software development) without improving the speed of the highway (developing hardware). Sorry, had to put in analogies for the “slower”, non-technical readers. I also wrote this slowly as they can’t read as fast.

This lack of startup finding should be of concern as the “gold” fish in the food chain will no longer exist as an outer company on the bracket. Gold is so 1990s as startups no longer make techies rich. All technology is bad because it’s associated with the ‘dot-bomb’ fiasco…..which by the way is not hardware related. No worries, we don’t need bees anyway so why fund the companies that represent a similar position in the technical food chain? Scientists figure we’d last about three months if bees disappeared. It won’t happen though because scientists theorized it, not accountants.

Source: Publishers, Libraries, and the Food Chain: By JOSEPH ESPOSITO MAR 14, 2017

Source: Publishers, Libraries, and the Food Chain: By JOSEPH ESPOSITO MAR 14, 2017

Note that this trend is not limited to technology. It also exists in the publishing world where native English speaking engineers can still seek refuge when losing a job to those who don’t.

Meanwhile, politicians go around beating a drum that small businesses are the key to the economy while ignoring the monopolies that control the economy. Of course, this isn’t true because of the red tape and book keeping required to run a small business. You spend more time pursuing future business and appeasing the government than you do actually conducting business and generating income. If the politicians do fix that, accountants have an answer already. Break the monopoly up into small businesses and then you will have to pay even less in corporate taxes.

The effect on industry will not be limited to the semiconductor companies. Distributors have already felt the pinch as new designs dwindle in the US with the growth of overseas engineering from graduate students educated on the US dime. Distys offer a diverse product line of technologies. These technologies are one of the reasons for acquisitions, to gain a technology you currently lack. As the mergers occur, the technologies get absorbed leaving less meat on the bone for distys.

Distys also offer services of assisting with designs. Although I enjoyed being a factory application engineer, it is no longer the fun career it once was. Instead, it’s focused on cranking out demo boards and application notes that provide the design without investing further engineering services. Of course the engineer that was laid off can spot the flaw in the feedback of this application note schematic. Too bad he’s no longer with you. Good luck tracking down the problem. I thought you acquired a company with strong technology? Maybe you should stick to IT. Transpose several things here and you’ll “get it”.

Although I’m very proud that my son chose engineering as a major, I’m wondering if maybe I should celebrate a text that says, “I changed my major to accounting. I didn’t have to bring any homework to Daytona with me and the ‘baxkitball’ team is staying in my room. We have chicks galore! They are impressed with how fast I finish their homework along with the ‘baxkitball’ team’s homework while they go off and play in the chick’s room and on the strip.” Your education is paying off son in the ways of the world today.

References

  1. 2015-2016 Deals Dominate Semiconductor M&A Ranking” icinsights.com website, no author listed, January 19, 2017
  2. These Companies May Be the Next Big Semiconductor Merger Targets” Chris Nolter Dec 23, 2016 11:00 AM EST
  3. Publishers, Libraries, and the Food Chain: By JOSEPH ESPOSITO MAR 14, 2017

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