Disruption From IoT and Automotive Shifts Revenue Mix

Infineon Technologies AG (FSE: IFX /OTCQX: IFNNY) and Cypress Semiconductor Corporation (NASDAQ: CY) announced that the companies signed a definitive agreement under which Infineon will acquire Cypress for USD 23.85 per share in cash, corresponding to an enterprise value of EUR 9.0 billion (~USD 10.1 billion). The bold bid is to strengthen offerings and counter aggressive moves by competitors over the last several years. Infineon expects to be catapulted into the top position in the supply of semiconductors to automotive OEMs, competing directly with automotive leader NXP Semiconductors.

Internet of Things has already revolutionized the consumer application industry, with various other IoT applications, such as connected cars and wearable electronics, evolving and likely to further drive opportunities for many IoT chip manufacturers across the large and complex IoT ecosystem. Huge IoT investments by companies such as Intel (US), Samsung (South Korea), IBM (US), and Qualcomm (US), along with government funding in IoT research projects, are driving the growth of the IoT market – especially in the UK, China, and Japan. The Infineon–Cypress deal will result in a wider portfolio of products for automotive, industrial, and IoT projects.

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Cypress is a significant player in the IoT market because of its ultralow-power PSoC technology. However, the company was not able to use this technology beyond generic radios. With the acquisition of Broadcom’s wireless IoT business in April 2016, the company aimed to strengthen its position in embedded systems markets such as automotive and industrial. It also strived to establish itself as a leader in the consumer IoT market, which includes wearable electronics and home automation solutions.

Post-acquisition, Cypress, with a range of microcontrollers with software and connectivity products, intends to sell alongside Infineon’s microprocessors and sensors. The acquisition would seek to address new IoT applications into industrial and consumer markets, and supply to automotive and driver-assistance providers.

“The semiconductor industry has witnessed drastic changes in the competitive landscape over the past five years, as companies syndicate to gain scale while overcoming challenges such as rising costs and dwindling customer bases”, said Sachin Garg – Associate Vice President, Semiconductor Division at MarketsandMarkets™. NXP Semiconductors NV recently announced a $1.76 billion deal for Marvell Technology Group Ltd.’s Wi-Fi connectivity business, while Nvidia Corp. agreed to buy chipmaker Mellanox Technologies Ltd. for $6.9 billion in March 2019.

NXP Semiconductors N.V., a leading player in the segment and a major market share holder, is an established supplier in this industry. This trend was started in 2014-15 and is followed by this recent acquisition. It is in a favorable position for growth owing to the positive outlook for the automotive semiconductor, Industrial, and IoT markets. A broad product portfolio and the ability to form strategic collaborations and partnerships would make the company a leading player in the expected IoT boom.

The company’s acquisition of the U.S.-based Freescale Semiconductor Ltd. would help both the companies to dominate the automotive semiconductor and the general-purpose MCU products segments. With Infineon acquiring Cypress, it would result in more competitive and complex market with multiple offering and redefined market strategies, supply chain network and addressing client pain points.

With China withholding Qualcomm Inc.’s failed effort of NXP Semiconductor’s takeover by offering USD 44 billion, it is under observation of multiple players and industry as whole to see whether Infineon can garner the necessary regulatory approvals in the midst of ongoing and escalating trade battles between world’s powerful economies; the US and China.

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 Schneider Electric, the leader in digital transformation of energy management and automation, today announced that IoT World named Kevin Brown as CxO of the Year in the Solution Provider category. The award recognizes outstanding leadership in IoT. As the SVP of Innovation and CTO of Schneider Electric’s Secure Power Division, Brown was honored for his ability to drive innovation and embrace the disruption our industry faces.

As the leading global IoT conference and exhibition, IoT World introduced the awards this year to honor exemplary IoT projects, products and individuals who have demonstrated outstanding achievement in 11 categories, with 51 entries named as finalists. The categories in the competition stretched across the IoT ecosystem. Brown and 16 others were nominated in the Solution Provider category.

“The IoT World ‘CxO of the Year’ awards recognize executives whose outstanding leadership has resulted in the implementation and success of IoT in their businesses and beyond,” said Zach Butler, director of Internet of Things World. “Huge congratulations to Kevin Brown for winning the solution provider category of the award. We saw almost 5,000 votes cast across the two CxO of the Year awards, in its first ever year. Kevin’s win is a clear testament to how effective his IoT leadership has been!”

In his role at Schneider Electric, Kevin has a front row seat to the convergence of IT and OT. He heads the research and development portfolio and leads a talented team of experts focused on innovation. IT energy consumption is forecasted to grow twice as fast as all other electrical consumption globally, and his team’s goal is to enable IoT while keeping sustainability and energy efficiency in mind.

“I am honored to receive this award from IoT World and proud to be part of Schneider Electric’s outstanding team,” Brown said. “I appreciate the support from my colleagues and I know that our company is leading the way. I can’t wait to see what else we will accomplish.”   

Schneider Electric is one of the only companies worldwide that offers a broad portfolio of OT solutions – from full power infrastructure to building management, industrial control, and data center infrastructure. Brown’s team leverages this full portfolio to enable IoT everywhere and develop a fully integrated ecosystem.