On Monday, British firm Dialog Semiconductor announced plans to acquire German mixed-signal integrated circuit manufacturer Creative Chips. The English fabless manufacturer is making the $80 million purchase to expand its industrial Internet of Things (IoT) portfolio. Besides, if the Teutonic concern hits certain financial targets in 2020 and 2021, its new parent company will pay out an additional $23 million.
Dialog wants to diversify its holdings to gain market opportunities in the low-energy connectivity equipment sector. The firm intends to complete the transaction by the end of the quarter.
Why Dialog Wants to Increase its Industrial IoT Holdings
According to Markets and Markets, the industrial IoT market will be worth $91.4 billion by 2023. As such, it’s an incredibly lucrative sector for any semiconductor firm to pursue. Moreover, Creative Chips has established itself as an enterprise of note within the rapidly expanding industry.
Reuters notes the German firm is on pace to generate $20 million in sales this year. Indeed, the component firm is also forecasted to increase its earnings by 25 percent per annum for the next few years. The company’s success has been driven by the fact that its IO link integrated circuits are essential to building Industry 4.0 networked systems.
Dialog CEO Jalal Bagherli noted his company’s new acquisition would bolster its core competencies and catalog. “The addition of Creative Chips and its team of highly experienced and talented engineers will help to further diversify Dialog’s product revenues, customer base, and end markets by extending our reach in the industrial sector in addition to strengthening our automotive offering.”
Long-Term Game Plan
Notably, the 34-year-old English corporation has been pursuing the industrial IoT market for a few years now.
Last October, the firm divested itself of a significant chunk of its mobile handset business in a deal with Apple. The Big Tech giant paid Dialog $600 million for its power management patents and 300 engineers. The British manufacturer has since used that cash injection to expand its industrial IoT holdings.
In March, Dialog made a deal with Silicon Motion Technology to acquire the firm’s FCI mobile communications products. Following that 45 million purchase, the English company integrated the Taiwanese firm’s battery-operated Wi-Fi controllers into its Bluetooth products. It also allowed the firm to add 100 narrowband IoT, power amplifier, and deep submicron chip experts into its workforce.
The fabless manufacturer’s purchase of Creative Chips represents another critical step in its long-term game plan to be a holistic provider of industrial IoT solutions.