Germany’s Dialog Semiconductor is buying US-based rival Atmel for $4.6 billion.
Both companies provide embedded processors and power management ICs and, while the combined entity will certainly be a more formidable competitor in those two categories, the stated rationale for the deal is to address emerging markets, notably the Internet of Things (IoT).
Dialog Semiconductor plc CEO Jalal Bagherli said: "Our new, enlarged company will be a diversified, high-growth market leader in mobile power, IoT and automotive. We firmly believe that by combining power management, microcontrollers, connectivity and security technologies, we will create a strong platform for innovation and growth in the large and attractive market segments we serve."
Those four technologies are shaping up as fundamental building blocks of any IoT product, and more companies with microcontrollers and power management are trying to position themselves by expanding into wireless connectivity.
Atmel Corp. (Nasdaq: ATML) has products for WiFi, RF ID and IEEE 802.15.4, which is the basis of several low-power transmission technologies, including ZigBee and IPv6 over low-power wireless personal area networks (aka 6LowPAN). Dialog, meanwhile, makes 6LowPAN and BlueTooth Smart products. BlueTooth Smart -- the latest iteration of that technology -- appears to be gaining significant market traction, in part because of new, built-in security features.
Dialog is hardly alone in thinking that those four elements (power management, controllers, connectivity, security) are key to any IoT system. Silicon Laboratories Inc. (Nasdaq: SLAB) bought BlueGiga Technologies Oy earlier this year for much the same reason. In fact, Atmel itself only got into the business last year when it bought Newport Media Inc. .
Dialog is clearly hoping that having all four elements under one roof will help it become more competitive against the three companies that thus far have dominated the Bluetooth market -- Nordic, Texas Instruments Inc. (NYSE: TXN) and Cambridge Silicon Radio (CSR) -- and ensure it can stand up to other companies eyeing the IoT chip market, including Broadcom Corp. (Nasdaq: BRCM), Cypress Semiconductor Corp. (NYSE: CY) and Microchip Technology Inc. (Nasdaq: MCHP).
— Brian Santo, Senior Editor, Test & Measurement/Components, Light Reading