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Skyworks Scoops Up PMC-Sierra for $2B

The combined company intends to be a one-stop shop for OEMs looking to buy ICs for Internet infrastructure, including data centers.

Brian Santo

October 6, 2015

2 Min Read
Skyworks Scoops Up PMC-Sierra for $2B

The unusually large wave of consolidation in the semiconductor market this year rolls on, with Skyworks Solutions buying PMC-Sierra for $2 billion in cash.

Other big deals this year include Intel Corp. (Nasdaq: INTC) buying Altera, Avago Technologies Pte. buying Broadcom and NXP Semiconductors N.V. (Nasdaq: NXPI) buying Freescale.

Skyworks Solutions Inc. (Nasdaq: SWKS) intends to position itself as a one-stop shop for OEMs and ODMs involved in building Internet infrastructure. The company expects data center equipment will be a big target market.

The two companies have complementary skills. Skyworks has expertise with analog, RF and mixed signal ICs. PMC-Sierra Inc. (Nasdaq: PMCS), meanwhile, specializes in ICs and software for storage, optical and mobile networks.

The deal works out to $10.50 a share. The price Skyworks is paying is about where PMCS stock has peaked from time to time over the years. PMC-Sierra's stock hit one of those peaks earlier this year, but in July it dropped to trade at about $6 a share after the second-quarter earnings report.

PMC-Sierra missed its earnings projection for Q2 and announced an exit from the market for chips for cellular basestations, a layoff (200 employees, or 14% of its total workforce) and a reduction in spending. The company blamed weakness in the carrier and storage end markets.

For more communications processor market coverage and insights, check out our dedicated comms chips content channel here on Light Reading.

Skyworks has experienced some ups and downs of its own. It has supplied chips for Apple's iPhones, but demand from Apple Inc. (Nasdaq: AAPL) has been unsteady recently.

Buying PMC-Sierra, expanding its portfolio and targeting new and apparently growing markets, such as hyperscale data centers (where demand has remained strong, PMC-Sierra reported in its second-quarter earnings call in July), could help the combined entity buffer itself better from ups and downs in the market.

"With our acquisition of PMC, Skyworks will be uniquely positioned to capitalize on the explosive demand for high performance solutions that seamlessly connect, transport and store Big Data," said David J. Aldrich, chairman and chief executive officer of Skyworks, in a statement.

"Specifically, we plan to leverage PMC's innovative storage systems, flash controllers, optical switches and network infrastructure solutions to expand our engagements with some of the world's leading OEMs and ODMs as well as emerging hyperscale data center customers," he continued. "At a higher level, this complementary yet highly synergistic acquisition is consistent with our stated strategy of diversifying into adjacent vertical markets while leveraging our system-level expertise and global scale. PMC enables us to substantially expand our serviceable market within some of the fastest growing segments in technology, including cloud storage and optical networking."

— Brian Santo, Senior Editor, Components, T&M,

About the Author(s)

Brian Santo

Senior editor, Test & Measurement / Components, Light Reading

Santo joined Light Reading on September 14, 2015, with a mission to turn the test & measurement and components sectors upside down and then see what falls out, photograph the debris and then write about it in a manner befitting his vast experience. That experience includes more than nine years at video and broadband industry publication CED, where he was editor-in-chief until May 2015. He previously worked as an analyst at SNL Kagan, as Technology Editor of Cable World and held various editorial roles at Electronic Engineering Times, IEEE Spectrum and Electronic News. Santo has also made and sold bedroom furniture, which is not directly relevant to his role at Light Reading but which has already earned him the nickname 'Cribmaster.'

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