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Cypress Stock Soared 12% Yesterday on Takeover Rumors

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Cypress stock gained 12%

Cypress Semiconductor (CY) stock jumped as much as 14.6% and closed 12.01% higher on Wednesday to $17.25 on reports hinting that the chipmaker might consider itself a takeover target. Currently, the stock is trading below its 52-week high of $18.59.

Cypress Semiconductor has a current market value of about $6.3 billion. Notably, Cypress’s market value is much lower than its semiconductor peers including Advanced Micro Devices, Micron Technologies, NVIDIA, and Qualcomm, which have market capitalizations of $30.4 billion, $36.8 billion, $85.5 billion, and $79.9 billion, respectively, as of May 29.

Cypress as a takeover target

Per Bloomberg, the San Jose, California based Cypress is exploring options and is working with advisers to sell off the company after receiving takeover interest. The chipmaker has been trying to reshape itself and provide chips for use in vehicles and Internet of Things (or IoT) and to connect devices. The company’s automotive business is expected to grow 8% to 10% annually over the next five years, while the IoT unit is anticipated to expand as much as 14% in that period.

Mergers and acquisitions have become common in the semiconductor industry in recent years as companies aim to reduce cost and gain scale amid stiff competition. On Wednesday, NXP Semiconductors announced a $1.76 billion deal for Marvell Technology’s Wi-Fi business. In March, NVIDIA also agreed to buy chipmaker Mellanox Technologies for a deal value of $6.9 billion.

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