Seeking Alpha

InvenSense buying Analog Devices' microphone unit

  • InvenSense (INVN) is acquiring Analog Devices' (ADI) analog/digital microphone ops for $100M in cash +  potential revenue milestone payments (payable over 12 months). The business is expected to account for less than 1% of ADI's FQ4 (ends Nov. 2) revenue. (PR)
  • There should be R&D synergies between the ADI unit and InvenSense's motion sensor ops, given both rely on MEMS technology. In addition, InvenSense will be able to cross-sell ADI's microphones to mobile/consumer electronics OEMs using its motion sensors, and vice versa.
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Comments (7)
  • Esekla
    , contributor
    Comments (3552) | Send Message
     
    There may be some cross-selling opportunity, but where exactly is the R&D synergy? This doesn't seem like their core business and the deal won't be accretive for over a year.

     

    See further commentary here: http://seekingalpha.co...
    14 Oct 2013, 04:51 PM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1184) | Send Message
     
    There is RD synergy because on the most basic level microphones, gyros, and motion sensors are very similar. They all have an element that is allowed some freedom of movement and circuitry that measures how much it moves. Invensence have significant leadership in this technology as their gyros and motion sensors are still much smaller and much more power efficient than the competition. They will probably be able to extend this to microphones.
    14 Oct 2013, 05:06 PM Reply Like
  • Esekla
    , contributor
    Comments (3552) | Send Message
     
    I'm aware of all that, but it still seems to be a move away from their core business, and rather early for such an acquisition. Please comment in the article referenced above as I won't be following this Market Current further.
    14 Oct 2013, 05:17 PM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1184) | Send Message
     
    Looks like they got the business for about 1 x annual revenues. Seems like a good deal considering INVN sells for about 8 times revenues while ADI is about five.

     

    Unfortunately, the margins are probably not the best (or ADI would not sell). Hopefully, INVN will improve margins using their leading MEMS technology.

     

    This is definitely a long term growth business. In the near future you will see that microphones, like cameras will start to crop up all over the place.
    14 Oct 2013, 05:23 PM Reply Like
  • wmnnbolton
    , contributor
    Comments (2) | Send Message
     
    Will the technology allow for combination in a SOC and provide cost and performance efficiency?
    14 Oct 2013, 09:57 PM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1184) | Send Message
     
    Regarding your first question -- probably not. While INVN do add some logic in a MEMS chip it is usually more efficient to put an actual processor on different chip than the MEMS. Regarding your second question -- probably yes.
    15 Oct 2013, 01:28 AM Reply Like
  • Bruce M Peterson
    , contributor
    Comments (3) | Send Message
     
    Digital Mems Mics have cut analog sales by over 20% this last year despite they are almost twice the cost. INVN should comfortably be able to cut the price in half making them the only supplier with a competitive Digital mike. They also need the patent rights or contract agreement to sell a digital mike which they will now have. By the way apple was the first to move to the digital mic and willing to pay the premium. This has significant upside for a company like INVN and had little value for a company like ADI.
    15 Oct 2013, 09:31 AM Reply Like
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