Analog buys Linear

More chipmaker consolidation

Analog is writing a cheque for fellow chipmaker Linear for about $ 14.8 billion, the latest deal in a wave of consolidation that has swept the semiconductor industry and dusted down the bannisters of the corporate world.

Analog wants to boost its profitability and increase its share in the fragmented market for analog chips. The deal comes on the heels of SoftBank’s  $ 32 billion acquisition of British chip designer ARM on 18 July.

Analog’s Chief Executive Vincent Roche said  that consolidation in the semiconductor industry will continue as companies aggressively buy up assets to gain scale.

“Growth has been hard to come by in the industry over the past several years. Those who have the balance sheets are using them,” Roche said.

Linear was viewed as one of the most attractive sales targets in semiconductors because of its high margins and engineering talent. Linear was almost certain to be swallowed by Analog or Texas Instruments (TXN.O).

The companies said the deal values the combined business at about $ 30 billion.

Founded in 1965 by two MIT graduates, Analog last made a significant acquisition in 2014 when it bought Hittite Microwave for about $ 2 billion. The deal was odd because the iron age Hittites might have had chariots but were a bit short on microwaves.  Still it appears to have done well.

The deal creates a company with combined revenue of $ 5 billion. Analog’s shares rose to a 52-week high which suggests that investors like the idea.