Chipset Consolidation Continues as NXP and Infineon Acquire Wi-Fi and Bluetooth Assets

Subscribe To Download This Insight

By Andrew Zignani | 3Q 2019 | IN-5542

Following the acquisitions recently detailed in the ABI Insights Dialog Semiconductor to Step up IoT Connectivity Efforts with Silicon Motion Acquisition (IN-5448) and ON Semiconductor to Acquire Wi-Fi Chipset Vendor Quantenna (IN-5477), consolidation in the short-range wireless space is set to continue as NXP Semiconductors and Infineon Technologies both acquire Wi-Fi and Bluetooth assets to help boost their presence in automotive, industrial, and Internet of Things (IoT) markets. In late May 2019, NXP announced that it was acquiring Marvell Semiconductor’s Wi-Fi and Bluetooth connectivity assets for US$1.76 billion, and in early June Infineon announced that it was set to acquire Cypress Semiconductor for US$10 billion.

Registered users can unlock up to five pieces of premium content each month.

Log in or register to unlock this Insight.

 

NXP to Acquire Marvell's Connectivity Assets and Infineon to Acquire Cypress Semiconductor

NEWS


Following the acquisitions recently detailed in the ABI Insights Dialog Semiconductor to Step up IoT Connectivity Efforts with Silicon Motion Acquisition (IN-5448)and ON Semiconductor to Acquire Wi-Fi Chipset Vendor Quantenna (IN-5477), consolidation in the short-range wireless space is set to continue as NXP Semiconductors and Infineon Technologies both acquire Wi-Fi and Bluetooth assets to help boost their presence in automotive, industrial, and Internet of Things (IoT) markets. In late May 2019, NXP announced that it was acquiring Marvell Semiconductor’s Wi-Fi and Bluetooth connectivity assets for US$1.76 billion, and in early June Infineon announced that it was set to acquire Cypress Semiconductor for US$10 billion.

Wireless Connectivity Driving Semiconductor Market Consolidation in 2019

IMPACT


Wireless connectivity has been the driving force behind these recent high-profile semiconductor acquisitions. Each company is strengthening its connectivity portfolio in order to better target some of the high-growth markets of the future—most notably automotive, industrial, and wider IoT connectivity—where Bluetooth and Wi-Fi wireless technologies are likely to have a strong presence. One of the leading Bluetooth Low Energy (BLE) chipset suppliers, Dialog, is gaining access to a new portfolio of ultra-low-power Wi-Fi System-on-Chips (SoCs) and modules to complement its existing IoT solutions with its acquisition of Silicon Motion, allowing it to develop combo Integrated Circuits (IC)s and target new IoT applications. ON Semiconductor is complementing its existing Bluetooth portfolio with Quantenna’s Wi-Fi chipsets. NXP is adding Marvell’s Wi-Fi 4, 5, and 6 solutions to its wireless portfolio, which already comprises Bluetooth, BLE, ZigBee, Thread, and Near Field Communication (NFC) technologies. Finally, Infineon is gaining access to Cypress’s Wi-Fi and Bluetooth connectivity ICs alongside its other expertise in microcontrollers and NOR flash memory, providing it with a key piece of the puzzle missing from its existing portfolio.

Each of the four acquisition statements explicitly state that the newly acquired connectivity assets have the potential to bolster opportunities within automotive, industrial, and IoT applications. Infineon claims the Cypress acquisition will enable it to become the number one automotive semiconductor supplier. Cypress’s complementary MCU portfolio will allow Infineon to offer a comprehensive MCU offering across all automotive applications, ranging from infotainment to Advanced Driver Assistance Systems (ADAS). From a connectivity perspective, Cypress announced the expansion of its automotive Wi-Fi solutions for infotainment applications at CES 2019. The company unveiled its first Wi-Fi 6 (802.11ax) and Bluetooth 5 combo solution featuring its Real Simultaneous Dual Band (RSDB) architecture, which enables two data streams to run simultaneously. Combined with Wi-Fi 6, the solution can support reliable content streaming for up to 10 mobile devices at the same time and 1 Gbps throughput. Infineon is also seeking to address other markets in which high-growth has been projected, such as smart home. In June 2016, Cypress acquired Broadcom’s Bluetooth and Wi-Fi IoT business for US$550 million. Infineon will inherit this business, which will enable it to take advantage of new opportunities in these IoT markets. The addition of connectivity to Infineon’s security expertise means it can offer full turnkey solutions for these IoT products and take a bigger percentage of the Bill of Materials (BOM).

NXP Semiconductors likewise noted that its acquisition of Marvell will enable it to expand its footprint in automotive, industrial, IoT, and communication infrastructure markets. Marvell offers a wide portfolio of Wi-Fi and Wi-Fi and Bluetooth combo ICs across numerous end markets, including enterprise access points, home gateways, voice assistants, home entertainment devices, gaming products, industrial equipment, and automotive infotainment and telematics. From an automotive perspective, Marvell’s 88Q9098 family of automotive Wi-Fi 6 and Bluetooth combo SoCs likewise offers concurrent dual Wi-Fi as well as a solution that integrates 802.11 and 802.11p concurrent operation with Bluetooth 5.  Marvell’s wireless business recorded US$300 million in revenues in fiscal 2019. NXP anticipates that the revenues from its acquired assets will double as early as 2022, while the new assets will enable it to combine their edge computing platforms and wide range of wireless connectivity technologies to provide flexible solutions that can streamline IoT deployments for end customers.

Consolidation to Drive Scalability and IoT Growth

RECOMMENDATIONS


In many respects, the motives for all of these acquisitions are extremely similar. Firstly, again, each vendor is looking to plug gaps in its existing connectivity offering to help attract new customers and fend off competition. Many of the larger semiconductor vendors have preexisting short-range wireless product offerings or have recently added Wi-Fi and Bluetooth to their portfolios. Therefore, it is critical to ensure that they keep up with their rivals and allow them to compete for a share of the considerable growth opportunities for short-range wireless across a mixture of automotive, industrial, consumer, networking, and IoT applications. The addition of Wi-Fi and Bluetooth connectivity also greatly complements NXP’s and Infineon’s respective expertise in embedded processing, sensing, and security, accelerating their entries into these environments and providing full solutions for these markets, which will allow them to take a much bigger piece of the BOM in these areas of interest. The acquisitions also open up greater cross-selling opportunities that stretch far beyond connectivity ICs, leading to additional design wins for NXP and Infineon’s existing offerings. The acquisitions can also lead to more unified, integrated, and comprehensive product offerings, helping to proliferate reference designs and turnkey solutions that can simplify supply chain logistics and allow NXP and Infineon’s customers to bring products to the market at a much quicker pace. In addition, the integration of connectivity into NXP and Infineon’s existing portfolios can also help speed up technological innovations, improve interoperability, and provide better customer service through the expansion of their expertise. Combined, these efforts can help scale the IoT market more effectively in the years to come, while the intense competition could also drive down costs and create more innovative solutions and technology combinations to better target the IoT. 

The timing of these acquisitions made all the more interesting by the anticipated growth in Wi-Fi 6 solutions over the next few years. By 2024, ABI Research expects that Wi-Fi 6 solutions will account for 40% of all Wi-Fi chipset shipments. These companies are also likely to be able to take advantage of the arrival of 6GHz Wi-Fi in the next few years, which could provide enormous performance enhancements across a number of verticals. The acquisitions also highlight the continued importance of Wi-Fi and Bluetooth across numerous IoT applications, and ABI Research anticipates there may be several more connectivity acquisitions in the coming months to ensure that chip suppliers remain competitive as they increasingly target new markets across the IoT. Smaller vendors may find it increasingly difficult to compete in this highly integrated and consolidated environment. Ultimately, the increased consolidation should help scale up the IoT market, allow for the development of turnkey solutions necessary for scalability, simplify supply chain complexity, intensify competition to drive down costs, and allow for more integration and new combinations to encourage the market to innovate and grow. However, it will be important for these vendors to leverage their existing expertise to develop secure, low-power, IoT-centric Wi-Fi 6 IoT chipsets to help increase the viability of Wi-Fi for IoT applications, leveraging Target Wake Time (TWT), Orthogonal Frequency Division Multiple Access (OFDMA), smaller channel sizes, and coexistence improvements to help open up new opportunities. More education and awareness about Wi-Fi 6 for IoT applications also needs to be developed, as to date this has focused on more traditional high throughput applications.