Creating strong road maps for leading customers: Semiconductor companies have long recognized the importance of delivering winning road maps for chip design, but the stakes are now higher than ever. In the past, customers that did not like a proposed road map might go to a competitor for their design needs. Such losses hurt, but they were often temporary because customers often came back to the original company for future designs. Now if customers are dissatisfied with a road map, they might move design capabilities in-house, resulting in a permanent loss of business.
M&A in moderation: The semiconductor industry has still been fragmented into several sub-divisions, and consolidation’s within the industry is still reasonable. One of the best strategy includes programmatic M&A that allows companies to acquire minimum of 1 company every year, spending an average of around 2 - 5 percent of their market capitalization that had each and every deal that accounted for above 30 percent of company’s market capitalization. These deals let players towards branching within adjacent parts towards firming their competitive situation. However, deals consisting of companies only offering alike products won’t be very worthy.
A factor that needs to be considered while planning a deal is the value that the deal will bring in terms of quality, price and performance to the customers of the company. If an M&A deal can increase any of such areas, it will be assisting the companies to create a more fascinating road map that will boost their future accomplishments. On the other hand, companies undertaking M&A need to be cautious in terms of over paying in the name of goodwill, or else they might risk putting an end to the value.
Upholding price consistency across the economic cycles: The big companies that have arisen from M&A deal have funds needed for creating cutting-edge chips. Nevertheless they will succeed only if they focus over smart planning as well as maintaining comparatively steady prices throughout the economic cycles, regardless of increasing or decreasing demands.
Preparing vertical integration amongst tech giants: A number of big tech players might attempt to obtain small scale companies, particularly if it has anticipated intellectual property, in order to upsurge their semiconductor competences. Other huge players may certainly opt for to licensing their technologies, instead of buying chips, or else to exit a few areas completely rather than operating subscale.
Aware of her elements, Neha writes the best articles across industries including electronics & semiconductors, automotive & transportation and food & beverages. Being from the finance background she has the ability to understand the dynamics of every industry and analyze the news updates to form insightful articles. Neha is an energetic person interested in music, travel, and entertainment. Since past 5 years, she written extensively on sectors like technology, finance and healthcare.
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