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  Date: 5th Apr 2011

TI acquiring National Semiconductor is not a smart move

The analog chip power houses Texas Instruments and National Semiconductor have signed a definitive agreement under which TI will acquire National for $25 per share in an all-cash transaction of about $6.5 billion.

In analog semiconductor precision is very key thing. Power consumption and high level of integration though important comes later. The cost is slightly less important because the performance can be expensive. In that sense National Semiconductor has all these but lacks in aggressive marketing push. TI has all these and a very aggressive marketing strategy also.

In many of the areas National's analog chips lead over TI. When it comes to LED drivers and DC/DC power modules, National's devices were looking so lovely (off course by performance). These are just two examples where both TI and National Semiconductor were competing with each other and this author personally believe National's chips are slightly better.

So there are competing technologies and not much complementing technologies between these two companies. Its mostly one is ahead of the other, such as National in solar power tracking technology. In solar domain National is way ahead of its competitors and also way ahead of right timing. Solar prowess of National will give the good results mostly in 2014-15. National is future ready for solar market but too early.

In today's market National has couple of lacking. It don't have microcontroller product line or any such SoC to match its analog prowess. In today's market much of analog and power semiconductor ICs can be sold to MCU customers as ride-on due to must need of set of analog ICs in embedded systems. TI with its broad product portfolio in MCU and DSP has this advantage of one stop shop for many chips.

National Semiconductor also not doing great in sales revenues in past 1-2 years compared to the industry average.

But National should have found a better bidder than TI; good example is Atmel. For TI also when it already has such a immense strength in signal processing analog, this acquisition is only worth to rank up in the vendor list, or stop other TI's competitor from acquiring National. But to TI's customers it is just another margin of improvement.

It looks TI strategy is to reach extremely strong position in analog. In that case this acquisition served the purpose to some extent and makes the life of TI marketing staff little easier.

According to this author acquisition of National by TI is TI + National, not TI* National.

This acquisition is going to drive the strategy thoughts of analog chip-makers in different dimensions and possibly inducing them to go for in-organic growth. There are plenty of options for acquisitions.


 
          
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