Semtech Corporation Acquires Sierra Wireless

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By Harriet Sumnall | 3Q 2022 | IN-6658

Semtech Corporation, a semiconductor manufacturer, announced earlier this month that it will be acquiring chip vendor and connectivity provider Sierra Wireless to accelerate its efforts in making Internet of Things (IoT) hardware.

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A Big Move by Semiconductor Manufacturer Semtech for a Big Result

NEWS


Semtech’s acquisition of Sierra Wireless, which is estimated to be worth US$1.2 billion, will likely double the semiconductor manufacturer’s annual revenue from what it is to date. A briefing suggests that part of the drive of this acquisition is based on aligning economic goals for Semtech, but this business move also offers the company an opportunity to address the pressing issues of climate change.

The acquisition brings together both LoRa and cellular technologies—two important connectivity solutions for the Internet of Things (IoT). The combination of both Semtech’s and Sierra Wireless cloud service offerings can be combined in the future for a cloud service portfolio that will include enhanced security for low power IoT solutions.

A Smoother Transition toward End-to-End Connectivity

IMPACT


This is not the first major movement that Semtech has made in regard to gaining a completely transparent world of connectivity options. In previous years, it has partnered with Lacuna Space to incorporate LoRa technologies with satellite connectivity. This partnership enables an extension of LoRa’s reach by adding the IoT to satellite connectivity using long-range frequency hopping technology. The partnership aimed to bridge the gap between terrestrial networks and worldwide satellite networks to offer ubiquitous connectivity suited for a variety of different IoT markets, offering low-power connectivity in areas whereby Wi-Fi and cellular technologies do not reach.

This acquisition will enable Semtech to expand in the IoT markets, with the ability to leverage Sierra Wireless’ cellular portfolio, in addition to Semtech’s own LoRa portfolio. Semtech does not have a hardware portfolio that compares to Sierra Wireless, which already has an expansive and yet impressive cellular hardware portfolio. This represents a significant business leap for Semtech, due to its lack of offerings in the IoT hardware space.

Strategic Partnership between Semtech and Sierra Wireless Making Capital Stretch Further

RECOMMENDATIONS


Semtech has always been a manufacturer wishing to extend the power of LoRaWAN technologies, and has been looking for ways to incorporate a ubiquitous connectivity option globally, as seen with the partnership with Lacuna Space. This acquisition will help them continue to do so. Sierra Wireless is heavily involved in manufacturing hardware specifically for cellular IoT solutions, such as chipsets, modules, and gateways. Enabling this hardware to be capable of connecting to both cellular and LoRa technologies offers a connectivity option for mission-critical IoT markets in which a reliable source of connectivity is crucial.

The acquisition will not alter the current Sierra Wireless hardware offerings, but will expand them. Offering LoRa hardware inclusively, with the hope of making a horizontal business case, is encouraging in that this business move will benefit solution creators by making connectivity decisions easier, rather than having to become software developer themselves.

This acquisition is one of the many that will likely occur in the future months. With the announcement of the Telit and Thales merger, followed by the Semtech acquisition of Sierra Wireless announcement, it is clear that the IoT hardware market, and more specifically the module market, entering a consolidation phase. Other market movements that have been witnessed are larger companies offsetting their portfolios and branching them off as different vendors, such as Sierra Wireless’ automotive portfolio was separated and became Rolling Wireless. This market will continue to see some business-savvy moves in the months to follow to ensure that each company remains as competitive as possible, while still offering high-quality portfolios.

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