The Value of Small M&A Deals for Chipmakers

By Syed Alam, Accenture
EETimes (May 26, 2022)

The semiconductor industry has been hit by a “perfect storm” — an ecosystem shocked by skyrocketing chip demand and supply chain issues all at once. Leaders in the semiconductor industry understand that to stay competitive with new resources and capabilities, they must find innovative ways to take advantage of those unique opportunities.

For semiconductor businesses, mergers and acquisitions have been a traditional method of growth. Increased regulatory scrutiny and fewer large semiconductor acquisition targets, however, have created a need for chipmakers to learn how to maximize their value from smaller transactions.

SMALLER DEALS ARE ON THE RISE

Between 2017 and 2020, large blockbuster deals over $1 billion increased annually as a proportion of total merger and acquisition (M&A) transactions from 2% in 2017 to 8% in 2020. However, over the past year and a half, regulatory, economic, and geopolitical shifts have had a clear impact on the market. Starting in 2021, this trend reversed and for the first time since 2017, the proportion of large deals over $1 billion decreased, shifting back to 5% of overall M&A transactions, according to Accenture Strategy’s analysis of S&P Capital IQ data.

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