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What’s driving the acquisitions in the analog design realm?

What’s driving acquisitions in the analog and mixed-signal design realm? Most deals recently made in this space don’t fall into the typical unification of competitors swallowing each other to gain market share. Take the case of Renesas Electronics, a digitally-focused company, which has acquired Intersil, IDT, and Dialog Semiconductor.

Chip designs are combining sensors, analog, and digital processing. As a result, chipmakers are maneuvering to add new design capabilities for these combined systems, says Joseph C. Davis, senior director of product management for Calibre Interfaces and mPower Power Integrity at Siemens Digital Industries Software. “These companies are acquiring capabilities to provide more comprehensive and powerful ICs for combined processing and interfaces.”

Laurie Balch, research director at Pedestal Research, calls this a tight integration of analog and digital building blocks in semiconductor design. She says that chipmakers clearly see this trend, and they are responding with relevant acquisitions. While that’s what is happening at the ecosystem level, there are more specific dimensions as well.

For instance, Mark Waller, director of the user enablement at Pulsic, points out that this consolidation wave follows the initial explosion of the Internet of Things (IoT) startups. “As a result, the existing analog companies have pivoted to this market.” He added that the analog design ecosystem is still strong and diverse despite this consolidation wave.

There are clear signs that a thriving ecosystem is emerging around analog, RF, and power. “That will support big companies that don’t have the target scale to go after,” said Sailesh Chittipeddi, executive VP and GM for IoT and Infrastructure Business Unit at Renesas. “As these companies get to some level of scale, new companies will form over time.”

Figure 1 The IDT purchase has brought Renesas valuable assets in power, RF, and timing.

That’s how the analog industry is going to evolve. There will be some big players with massive scale, and then there will be startups where talented engineers, who don’t want to work in the corporate environment, will start new companies. It’s an interesting landscape where most of the acquisitions are happening in the swim lanes.

Take the example of Analog Devices Inc. (ADI). The core part of what ADI has been doing is data converter stuff around which the company is now bolstering power management and other analog capabilities, whether they came from Linear Technology or other acquisitions made a little bit before. The whole idea is that analog is becoming a protective layer around the original competency of the company.

Microchip also has an interesting story when it comes to analog-centric acquisitions. In 2012, it acquired mixed-signal connectivity specialist Standard Microsystems, also known as SMSC. It was an analog play aimed at complementing embedded applications. Six years later, in 2018, Microchip acquired Microsemi, a high-performance analog firm that has also done some pioneering work in silicon carbide (SiC) semiconductors.

Figure 2 This is how the digital-centric Renesas (middle) is being supported by the power and RF offerings of Dialog Semiconductor.

Chittipeddi’s employer Renesas provides another classic case study. The chipmaker has processing capabilities as its heart and soul. Around this defensible core, Renesas wants to build capabilities to strengthen its portfolio. “Most of the integration is happening around the swim lanes where you have a core competency around which companies are fortifying their positions and building more depth,” Chittipeddi said.

Renesas case study

A closer look at the acquisition deals made by Renesas reveals more specific objectives. First and foremost, in Renesas, most of the R&D has been done in Japan, where one of the major challenges is the aging population. So, the pool of available engineers is shrinking over time. “With the addition of Intersil and IDT, we have been able to grow some engineering talent in the United States,” said Chittipeddi. Next, with the addition of Dialog, our global talent base is much more diversified for the first time, he added. “We want to become a global company in every sense of the world as opposed to being a Japan-centric company.”

The second factor that drove these acquisitions was revenue diversification. Renesas has always been known for automotive; with this acquisition, over 60% of Renesas revenue will come from the non-automotive business.

Third, portfolio diversification has been equally important. What Renesas has been doing on the automotive and industrial side, IDT and Intersil provided that on the IoT business and data center business side, mainly in the form of power, timing and interconnect technologies. Furthermore, IDT brought Renesas very good memory interface products with robust timing and synchronization technologies.

On the industrial side, what Dialog Semiconductor brought is the configurable mixed-signal ICs or CMICs. Chittipeddi says that what Dialog has done is quite unique. “Dialog has taken a few discrete devices like LDOs and put a state machine around them to allow programmability,” he added. “So, designers can mix and match their circuit to perform functions as needed and bring stuff on-board much quicker.”

Figure 3 Configurable mixed-signal IC, which came from Dialog’s Silego acquisition, enables mixed-signal functions to be designed within a tiny, low-power chip.

Moreover, in the power domain, Intersil primarily played in the mid-range, catering to computing, laptop, and industrial markets. On the ultra-low-power side, having to do with mobility, there was very little for small form factor devices like battery chargers for smartphones. Renesas didn’t have those capabilities, though the company was working on them. “The Dialog acquisition got us to scale very fast,” Chittipeddi said.

Additionally, on the low-power regime, while Renesas had AC/DC conversion for the industrial designs, the chipmaker didn’t have AC/DC for wall sockets. Dialog has been known as a low-power player, whether it’s power management or connectivity. So, low-power connectivity for Wi-Fi, Bluetooth and Zigbee is another boon for Renesas. “When you look at the IoT portfolio, one of the major weaknesses on the Renesas side has been connectivity, and Dialog brings that capability,” Chittipeddi acknowledged.

He also noted that while Renesas and IDT have good memory products on the SRAM side, the company get hold of NOR flash and resistive RAM technologies with the Dialog acquisition. That is a bird’s eye view of how the diverse assets acquired from Intersil, IDT, and Dialog are shaping Renesas into a global semiconductor outfit. The heart and soul of what we do is edge computing with MCUs and MPUs, Chittipeddi concluded. “We are building analog and mixed-signal competency around this defensible core.”

Editor’s Note: It’s the second article in a series focusing on the changes in the analog design landscape. The first article chronicled the current analog and mixed-signal design state, while the third and final article will cover the dearth of analog design talent and what could be done to overcome this shortage.

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