Stephen Simpson, CFA
Darspal S Mann
Oct. 6, 2015, 12:57 PM
- Skyworks (NASDAQ:SWKS) has tumbled towards $75 after announcing it's buying storage and telecom IC vendor PMC-Sierra (NASDAQ:PMCS) for $2B in cash on hand. (PR)
- Fellow RF chipmaker Avago (AVGO -6.7%), which (thanks to the LSI acquisition) competes against PMC-Sierra in the storage controller market, is also off, as is merger partner Broadcom (BRCM -3.2%), which competes against PMC to an extent in the telecom IC and network processor markets. RF peer Qorvo (QRVO -3.3%) is also getting hit. The Nasdaq is down 1.2%.
- Possibly hurting the group: Skyworks has used the PMC deal to announce it expects FQ4 (calendar Q3) revenue of $880M and EPS of $1.52. That's slightly above prior guidance of $875M and $1.51 and a consensus of $876M and $1.51, but expectations have been high following a long string of beat-and-raise quarters.
- The PMC acquisition expands Skyworks' reach to a slew of non-RF chip markets and enterprise/telecom infrastructure end-markets. It's expected to yield $75M in cost synergies within 12 months of closing (expected in 1H16), and subsequently boost Skyworks' annual EPS by $0.75. Assuming that target is hit, Skyworks is paying 14x forward EPS.
- Update (1:04PM ET): BofA/Merrill is defending Skyworks and Avago, arguing forward P/Es of less than 10 make shares very cheap.
- Update 2 (5:01PM ET): The group staged a comeback in afternoon trading. Skyworks closed down 1.4%, Avago 3.4%, Qorvo 1.1%, and Broadcom 1.6%. The Nasdaq closed down 0.7%.
May 27, 2015, 3:00 PM
- Chip stocks are posting outsized gains (SOXX +4%) amid a 1.3% increase for the Nasdaq after the WSJ reported Avago and Broadcom are in advanced merger talks, sparking hopes for further M&A.
- A Broadcom/Avago deal would be worth ~$67B at current valuations, easily making it the largest in the chip industry's breathless consolidation wave. It would also touch markets ranging from smartphones to set-tops to servers to switches/routers.
- Notable gainers include Avago RF chip peers Skyworks (SWKS +4.3%), Qorvo (QRVO +3.2%), and Anadigics (ANAD +4.9%). Others include Micron (MU +3.8%), SanDisk (SNDK +4.3%), NXP (NXPI +3.5%), Silicon Motion (SIMO +8.3%), Cirrus Logic (CRUS +4.8%), STMicroelectronics, (STM +3.4%), Synaptics (SYNA +3.4%), Atmel (ATML +2.8%), Cavium (CAVM +4.5%), Intersil (ISIL +4.6%), Semtech (SMTC +3.9%), ON Semi (ON +3.8%), Microsemi (MSCC +4.4%), and IDT (IDTI +4.2%).
- Non-chipmakers tied to the industry are also doing well. Standouts include ARM (ARMH +4.4%), Amkor (AMKR +4.6%), ASML (ASML +3.1%), and Rambus (RMBS +3.3%).
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Jan. 2, 2015, 9:47 AM
- As of today, RF Micro and TriQuint no longer exist as independent companies. Qorvo (NASDAQ:QRVO), the post-merger entity, is currently trading above $68 on the Nasdaq.
- Last month, SA Pro author Helix Investment Research argued in favor of holding onto Qorvo, in spite of RF Micro and TriQuint's huge 2014 gains. Helix cited strong post-merger synergies/expected margin expansion, a healthy balance sheet, and ongoing industry growth thanks to the higher RF content of 4G devices.
Nov. 24, 2014, 11:41 AM| Nov. 24, 2014, 11:41 AM | 1 Comment
Sep. 18, 2014, 6:56 PM
- Once their merger officially closes, RF Micro (NASDAQ:RFMD) and TriQuint (NASDAQ:TQNT) will be known as Qorvo, and trade under the symbol QRVO.
- The companies (or their marketing departments) claim the new name "conveys the combined company's ability to deliver the core technologies and innovation that will enable customers to launch their next-generation designs even faster."
- RF Micro and TriQuint shareholders have already approved the all-stock merger, which will result in each investor base owning about half of the post-merger company.
Jun. 25, 2014, 6:22 PM
- Black Sand Technologies, based out of Austin, was founded in '05 and has raised $28.2M in funding over its history.
- Notably, the product page on Black Sand's site only shows 3G amplifiers, and the most recent PR on its news page is from 2012. All signs suggest Qualcomm (QCOM) is buying the company to strengthen its power amplifier IP and/or engineering talent, as it encroaches on the turf of established vendors such as Skyworks (SWKS), TriQuint (TQNT), RF Micro (RFMD), and Avago (AVGO) with system-level solutions.
- Qualcomm, estimated to have 64% of the 2013 baseband processor market, made a dramatic entry into the amplifier market last year by announcing an RF front end solution (amplifiers included) that promised superior 3G/4G multi-band support and (via technologies such as envelope tracking) power efficiency. Skyworks, TriQuint, and RF Micro all tumbled following the announcement.
Jun. 9, 2014, 10:36 AM
- A slew of chip stocks are rallying following Analog Devices' (ADI +5.9%) $2B deal to acquire RFIC vendor Hittite Microwave.
- The purchase is part of an M&A wave that has hit the semiconductor industry over the last 12 months, as chipmakers try to gain scale, cut opex, and grow their cross-selling opportunities by consolidating. Other deals: RF Micro/TriQuint, Avago/LSI, Microchip/ISSC.
- ADI, which shares many telecom equipment, defense/aerospace, and automotive clients with Hittite, predicts Hittite's RF, microwave, and millimeter wave ICs will complement its RF and signal-conversion (ADC/DAC) products.
- Several RF and analog/mixed signal chipmakers are higher, but they're not the only gainers: RFMD +1.8%. TQNT +1.8%. PSMI +2.5%. LLTC +1.6%. MSCC +2.1%. IDTI +3.8%. ATML +3.4%. IRF +1.4%. SIGM +3.9%. AMCC +3.8%.
- Chip ETFs: SOXX, SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Feb. 24, 2014, 7:42 AM
- RF Micro Devices (RFMD) and TriQuint Semiconductor (TQNT) will merge in an all-stock transaction.
- Under the terms of the deal, TriQuint shareholders will receive 1.675 shares of the new entity and RFMD shareholders will receive one share for each TriQuint or RFMD share held.
- The combined is expected to churn up $150M in cost synergies.
- Trading in both stocks is halted at the moment.
Oct. 29, 2013, 2:03 PM
- In a new 13D, activist investor Starboard Value (8.2% stake) calls on TriQuint (TQNT +4.6%) to unload its mobile power amplifier business, arguing the business' "underperformance" is weighing down the value assigned to its healthier BAW filter and networking/defense RF component businesses.
- Aided by strong Apple orders, TriQuint's mobile chip sales rose 53% Y/Y in Q3. But the company also issued below-consensus guidance, and (thanks in part to its exposure to BlackBerry) has lost mobile power amplifier share in recent years.
- TriQuint mentioned on its CC (transcript) filters now make up ~30% of its mobile chip sales, and that's it's looking to add filter capacity.
Aug. 7, 2013, 7:33 PM
- CAP Wireless provides high-power RF/microwave amplifiers and related subsystems for telecom infrastructure and defense equipment.
- TriQuint (TQNT) touts the potential of CAP's Spatium RF power combining tech, which can deliver superior power efficiency relative to traditional TWTA amplifiers, to address a market expected to be worth $600M in 2015.
- Going forward, CAP's amplifiers will leverage TriQuint's gallium nitride (GaN) RF/power components. TriQuint has been busy releasing new GaN chips.
- The deal helps lower TriQuint's dependence on a mobile power amplifier market that features tough competition from Skyworks, RF Micro, and Avago, and where much dependence on Samsung and Apple's buying patterns.
Nov. 5, 2012, 1:47 PM
RF Micro Devices (RFMD +0.6%) is spending $47.5M in cash to acquire Amalfi Semiconductor, a developer of RF/mixed-signal chips for low-end smartphones. Amalfi specializes in RF CMOS chips, which can be cheaper than traditional gallium arsenide parts. The purchase comes at a time when low-end Android sales to emerging markets are heavily responsible for smartphone growth. Rival Skyworks noted on last week's earnings call it expects the Chinese smartphone market to be a big near-term growth driver.| Nov. 5, 2012, 1:47 PM | 1 Comment