Seeking Alpha

Analog chipmakers jump on Infineon M&A report

Bloomberg reports Infineon (OTCPK:IFNNF) "nearing an agreement to acquire a U.S.- based semiconductor company for about $2 billion," and that a deal could be announced as soon as today.

No word on whom Infineon is looking to buy. Bloomberg notes it reported last month analog/mixed-signal chipmakers Fairchild (FCS +5.6%), Power Integrations (POWI +11.3%), and Semtech (SMTC +8%) are considered M&A targets, as the chip industry continues to consolidate.

Shares of all three companies are up sharply, as are those of peers International Rectifier (IRF +5.8%) and Intersil (ISIL +4.4%). FCS and IRF are currently worth $2B; POWI is worth $1.9B; ISIL is worth $1.8B; and SMTC is worth $1.7B.

"[Infineon] would like to build a stronger presence in power management," says Liberum Capital's Janardan Menon. He adds the market has "high barriers to entry and strong growth prospects," a fact that also hasn't been lost on Texas Instruments and other industry players.

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