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China and the Global Semiconductor Space Are Consolidating

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A consolidation phase

So far in this series, we’ve looked at Tsinghua’s offer for Micron Technology (MU) and changing China’s semiconductor landscape through strategic acquisitions. However, it isn’t just China’s semiconductor space that’s seeing a lot of M&A (mergers and acquisitions). It isn’t the only country that’s going through a consolidation phase. In the last couple of months, a lot of mega deals have happened in the semiconductor sector around the globe.

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On May 28, 2015, Avago Technologies (AVGO) announced that it would acquire Broadcom (BRCM) for $37 billion. It’s said to be the largest technology acquisition made to date. Within one month of Avago’s announcement, Intel announced the acquisition of Altera. It was the second biggest deal in the global semiconductor space. Another noteworthy acquisition was Freescale Semiconductor’s (FSL) purchase of NXP Semiconductors (NXPI) in March 2015 for $11.8 billion.

Intel continues to rule the semiconductor market

According to IHS Technology, and as the above chart shows, Intel (INTC) continued to be the top supplier in the semiconductor space with a 14.10% market share. It was followed by Samsung and Qualcomm (QCOM) with 10.80% and 5.50% of the market share, respectively. Micron and SK Hynix held 4.60% and 4.50% of the market share, respectively.

Despite consolidation happening and semiconductor companies combining to become bigger, Intel continues to lead this market. According to Gartner, Intel had a 15.40% share in the worldwide semiconductor market in 2014. Samsung, Qualcomm, Micron Technology, and SK Hynix are the other four top players in this market.

If you’re bullish about Intel, you can invest in the VanEck Vectors Semiconductor ETF (SMH). SMH invests 19.40% of its holdings in Intel.

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