Infineon's (IFX) CEO Wolfgang Ziebart recently departed the company. This has given new energy to consolidation speculations, which I think is not without reason.
Ziebart, it is said, was a proponent of small acquisitions and organic growth. His exit seems to have come after internal management disagreements. With Ziebart gone, the doors are now open for larger mergers directed towards consolidation along the lines of the recent STMicroelectronics (NYSE:STM) - NXP Semiconductor Joint Venture [JV]. One of the possibilities being floated around is a merger with NXP. Another possibility is a wireless JV with Freescale (NYSE:FSL). These possibilities are not mutually exclusively either.
Infineon, much like STM, has been in financial pains. The company (exclusing Ziebart) seems to be bitten by the European consolidation bug. The way I see it, Europe is consolidating its technology value chain and some changes in Infineon's strategy and management philosophy are inevitable.
I would opt for a mixed strategy. The small acquisition and calculated growth path that Ziebart believed is a good way to grow market share in new segments. This is also the strategy that another semiconductor giant, Texas Instruments (NYSE:TXN) is opting for. A Freescale JV to gain scale and compete effectively in wireless can complement this strategy.
But undoubtedly, the political and legal environment in Europe makes the NXP merger a real possibility as well. I repeat, European semiconductor manufacturers and the value chain are consolidating, and Infineon will be an active part of the big picture. So, don't be surprised if you see more mergers later this year.
[All thoughts expressed here are those of the author's and do not necessarily reflect those of either Atheros Communications or TensorComm Inc.]