Cypress: About That Broadcom Buy
Author:OMO Release Date: 2016年5月5日
Summary
Cypress has bought Broadcom's Internet of Things business for $550 million.
Legendary CEO T.J. Rodgers has stepped down at age 68.
Could an auction for the company be in the offing?
With analysts producing growth graphs that look like hockey sticks, the Internet of Things, or IoT, looks like a good business to buy into.
ABI Research says Internet of Things chips will represent 28% of the semiconductor market by 2021, with various parts of the market growing 36-60% per year. Research and Markets sees 38% growth in healthcare alone,reaching $163 billion by 2020. Machina Research says the IoT market will reach $4 trillion by 2025.
These numbers are big enough to attract companies like Intel(NASDAQ:INTC), which is pulling its people out of mobile in order to focus on it, a pivot as important (in its way) as Texas Instruments' (NASDAQ:TXN) decision over 30 years ago to abandon microprocessors in favor of digital signal processing.
That decision has had a knock-on effect with Broadcom, now part of Singapore's privately-held Avago Technologies, which decided to get out of the market, selling its IoT businesses to Cypress Semiconductor (NASDAQ:CY) for $550 million in cash.
Broadcom's current IoT run rate is about $189 million per year, making it one-tenth the size of the acquirer.
At the same time it announced the deal with Broadcom, Cypress also said its legendary founder, T.J. Rodgers, has quit the CEO chair at age 68, and the board was told to go after "new blood" for the post.
It would be nice if Cypress could find another Rodgers inside that Broadcom business, or from somewhere else, who will drive CY forward in the IoT. It would be easy to speculate that Cypress, which has been paying an 11 cent/share dividend even while losing money most quarters, is seeking another growth spurt.
On the other hand, Cypress could be setting itself up as a meal for a larger company like Texas Instruments that is looking for an IoT play of its own. OrIBM (NYSE:IBM), which has been moving more heavily into IoT through acquisitions like the Weather Channel's tech platform. Chinese chip companies looking for growth could also be interested - the IoT is a big, big deal in the country's latest five-year plan.
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