A combined Texas Instruments-National Semiconductor would create the world's third largest semiconductor manufacturer and expand TI's dominance of the analog chips space.
Texas Instruments is looking to become the world's third largest
semiconductor manufacturer with its $6.5 billion bid for National
approved by regulators, the deal would give a combined TI-National
Semiconductor $14.5 billion in revenues, pushing Toshiba-with its $13
billion-into fourth place, according to the analysts at IHS iSuppli. It also
would bolster TI's leadership in the space for global analog integrated
circuits. TI currently owns 13.7 percent of the market; with National Semiconductor
under its belt, that figure would jump to 16.8 percent, with revenues of about
an April 4 conference call with investors, analysts and journalists, Rich
Templeton, chairman, president and CEO of
TI, said the proposed deal is about rapidly expanding the business and adding
to the company's product portfolio by buying a company with complementary
offerings and little overlap.
this [deal], we add 12,000 products all at once," Templeton said, noting
that TI currently has about 30,000 analog products.
chips take signals such as sound and light and make them into digital signals.
Though the trend is toward analog chips being replaced by digital ones, it's
still a healthy market, at about $42 billion, according to TI. Showing the
complementary nature of the proposed acquisition, Templeton said TI will be
able to join its strength in such areas as computer and communications
systems-such as mobile phones-with National Semiconductor's growing expertise
in the industrial sector. About 45 percent of National Semiconductor's revenues
in 2010 came from the industrial space, he said.
to Templeton, the key reasons for the deal is that it will give TI access to a
new customer base, it will accelerate the growth of both TI and National
Semiconductor, and "the numbers work for both companies," with ROI (return
on investment) within a few years.
products will get to more customers after this deal than either [company] could
have done on their own," he said.
deal also will grow National Semiconductor's sales force to more than 10 times
what it currently has, Templeton said.
Macleod, chairman and CEO of National
Semiconductor, said he wasn't looking to sell the company, but that TI
executives approached him. He reiterated Templeton's contention that there is
little product overlap between the two companies, and that the deal will work
because of the complementary nature of the portfolios.
pointed to some new areas that National Semiconductor is moving into, such as
LEDs, solar and electric vehicle battery maintenance, and said combining with a
company like TI will only accelerate such efforts.
response to a question from an analyst, Templeton said he doesn't expect to
have problems getting regulatory approvals for the deal. TI officials expect
the deal to close in six to nine months.