Insight Bite

Demand for makers of artificial intelligence (AI), 5G, and Internet of Things (IoT) chips is driving a resurgence in the semiconductor market.

In the most recent deal, Reading-based chipmaker Dialog Semiconductor has agreed to acquire US firm Adesto for $500 million in cash. The acquisition will see Dialog Semiconductor, which is focused on power-management chips and low-energy products for fitness trackers and cordless earphones, push further into one of the fastest growing semiconductor sectors: Industrial Internet of Things (IIoT).

Adesto not only offers Dialog Semiconductor expertise as a custom chipmaker for industrial, consumer, communications and embedded systems for the IIoT market, but also access to Adesto’s more than 5,000 customers.

“Adesto’s deep customer relationships, comprehensive system expertise, and proprietary technology will deliver enhanced value for Dialog customers.” said Jalal Bagherli, CEO of Dialog Semiconductor. “Adesto’s established strength in connectivity solutions and highly optimised products for building and industrial automation perfectly complements and adds scale to our Industrial IoT portfolio.”

The Adesto deal is the third in a string of Dialog Semiconductor purchases all aimed at capitalising on IoT. In March 2019, Dialog paid $45 million for Silicon Motion’s wireless communications arm, and in October of the same year paid $80 million for Germany’s Creative Chips (advised by Acuity). Between them, the deals gave the firm expertise in the low-energy connectivity chips and analogue mixed signal design used within IoT devices.

Even against the headwinds of the US-China trade war and unprecedented government intervention, demand for connectivity and networking chips has pushed the semiconductor market forward.

2019 saw a jump in acquisition agreements for suppliers of these chips. This is largely driven by increased appetite from the nascent automotive and transportation markets of connected cars and intelligent transportation systems (ITS).