Mergers and acquisitions have sent the silicon wafer market scurrying all over the map this year. Taiwan’s snapping up brands in the USA, South Korea is feasting on its own wafer manufacturers, and many of Japan’s semiconductor giants are merging. M&As are rarely free of complexity, and the semiconductor industry’s problems are being fueled by dwindling equipment supply and revenue loss. Problems bring opportunity, and in the business world, that means buying up the stragglers or merging to pool resources.
200mm Shortages Drive M&As
Wafers are still a scarce commodity, a crisis that the industry is desperately trying to survive profitably. All recent mergers have needed to address the shortage. LG Corp sold a 51 percent stake in LG Siltron Inc. to SK Holdings Co for a little over $531 billion. The Competition Commission of Singapore has concluded that the savvy move won’t reduce competition in the supply of wafers, DRAMs, or NAND memory. SK Group’s chairman will be feeding his wealth into the only silicon wafer manufacturer in the country.
SunEdison was acquired by GlobalWafers for almost $700 million in 2016. The two producers have diverse clientele, so the acquisition should increase the footprints of both companies. SunEdison lost $165 million in the first half of 2016.
Sumco’s merger with Mitsubishi Materials and Sumitomo is unlikely to help any of the involved parties to survive the wafer shortage. Mitsubishi and Komatsu haven’t maintained their equipment, so the move may hurt Sumco’s bottom line. The merging of production lines could free up desperately needed capital, but the equipment challenges could prove too catastrophic to survive.
There were 10 significant mergers and acquisitions in 2016 alone. Some have occurred to help new companies to break into fresh industries, but most have the industry’s current 200mm crises at their core. The shared focus of industry leaders may be the best tool the sector has to solve the semiconductor industry’s supply woes.