Semiconductor maker Semtech has announced plans to acquire fellow chip vendor Sierra Wireless in an effort to accelerate its push into making internet of things components.
Semtech makes a variety of analog and mixed-signal chips, including long-range, low-power wireless RF connectivity, power management, and video-broadcast equipment. Sierra Wireless makes dedicated IoT technology. Semtech has made steps toward this market but a takeover of Sierra would accelerate the effort.
“We believe the next era of technology growth is the full digitization of our industrial world—the internet of everything,” Mohan Maheswaran, CEO of Semtech said in the statement. “Our vision is to build a simple, horizontal platform with the goal of accelerating this transformation and to bring about a smarter and more sustainable planet.”
Sierra has a marketplace through which customers can buy wireless data plans for IoT devices. It also has a cloud-based IoT management platform called AirVantage, which lets customers manage all of their device subscriptions and optimize communications of their devices. Semtech was working on its own cloud platform for managing IoT deployments more efficiently, and Sierra could give it a jump start.
With Semtech’s sensor chips and Sierra’s IoT connectivity, the two firms see potential in the following markets:
- Supply chain, logistics and asset management
- Utilities, including water, gas and electric metering
- Smart cities and building, including air quality monitoring and public safety
- Smart agriculture and species protection
The all-cash deal is valued at $1.2 billion and includes Semtech taking on Sierra’s debt. Post-deal, Semtech projects its annual revenue will roughly double, including US$100 million of high-margin IoT cloud services recurring revenues, according to a statement from Semtech announcing the deal. The purchase is expected to close in early 2023.
Semiconductor deals had chilled recently. A planned Nvidia/Arm deal was scuttled after massive opposition from regulators and competitors, and AMD’s purchase of Xilinx took nearly 18 months thanks to foot dragging by the Chinese government.
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