IHS iSuppli on TI's acquisition of National Semiconductor

EL SEGUNDO, USA: Texas Instruments of the United States said it will buy National Semiconductor Corp. for about $6.5 billion. The company will pay $25 a share in the all-cash transaction.

Based on final results from the year 2010, the National acquisition would make Texas Instruments the world's third largest semiconductor company. This would allow Texas Instruments to rise one place in the rankings from fourth place, supplanting Japan's Toshiba Corp.

The combined companies would have revenue of $14.5 billion, compared to $13 billion for Toshiba, which would fall to fourth place. Texas Instruments will still trail No. 2 semiconductor supplier Samsung Electronics Co. Ltd. of South Korea by a wide margin as Samsung’s 2010 revenue amounted to $27.8 billion. National in 2010 ranked 37th among all semiconductor suppliers.

The National acquisition also will expand Texas Instruments' leadership in the global market for analog integrated circuits. TI in 2010 earned $6.4 billion in analog IC revenue, accounting for 13.7 of global market revenue, and making it the world’s largest supplier. With the addition of National's $1.4 billion in sales, Texas Instruments’ total analog revenue would rise to $7.8 billion, giving it a 16.8 percent share of the market. This would expand Texas Instruments' lead over No. 2 supplier STMicroelectronics to 8.8 percentage points, up from 5.7 points before.

With in the analog segment, the acquisition will particularly bolster Texas Instruments lead in the market for voltage regulators. Texas Instruments was the leading voltage regulator supplier in 2010, with $1.7 billion in revenue and a share of 18.1 percent. National was the third largest supplier, with $758 million in revenue and 15.2 percent in revenue. With the acquisition, Texas Instruments' voltage regulator revenue would amount to $2.4 billion in 2010, giving it a 26.5 percent share of the market.

Voltage regulators represent a segment of the semiconductor market that delivers consistent, above-average annual growth.

The global voltage regulator market expanded by 36.3 percent in 2010 to reach $9.1 billion, up from $6.7 billion in 2009. This represented larger growth than the total semiconductor market, which expanded by only 32.1 percent for the year.

During the past nine years, from 2001 to 2010, the global semiconductor market has expanded by 93.1 percent. In contrast, the voltage regulator segment has expanded by 169.4 percent, rising to $9.1 billion in 2010, tripling from $3.4 billion in 2001.

The acquisition also will bolster Texas Instruments' dominant position in another segment of the analog market: analog/comparator integrated circuits. Texas Instrument in 2010 earned $932 million in analog/comparator revenue, giving it a 24.6 percent share of the market.

With the addition of National's $364 million in sales, Texas Instruments' revenue would rise to $1.3 billion and its share would increase to 34.2 percent.

Source: IHS iSuppli, USA.