Microchip acquires Microsemi for £6.06 billion

The semiconductor industry is continuing to shrink, with Microchip Technology announcing a deal to acquire its rival Microsemi Corporation for £6.06 billion.

Founded in 1959 by Arthur Feldon and Steve Manning, Microsemi - then known as MicroSemiconductor - the company enjoyed considerable success as a supplier of components to the US missile industry. Today, the company is a major manufacturer of integrated circuits for everything from storage control to audio processing with 4,400 employees and a £1.2 billion annual revenue. For the last few years, though, it has been seeing its net income shrinking and has been reportedly seeking a buyer - finding one this month in Microchip Technology, its brash young upstart rival founded in 1987 as a General Instruments spin-off, in a deal valued at £6.06 billion.

'We are delighted to welcome Microsemi to become part of the Microchip team and look forward to closing the transaction and working together to realise the benefits of a combined team pursuing a unified strategy,' said claims Steve Sanghi, chair and chief executive of Microchip. 'Even as we execute a very successful Microchip 2.0 strategy that is enabling organic revenue growth in the mid to high single digits, Microchip continues to view accretive acquisitions as a key strategy to deliver incremental growth and stockholder value. The Microsemi acquisition is the latest chapter of this strategy and will add further operational and customer scale to Microchip.'

'Microchip and Microsemi have a strong tradition of delivering innovative solutions to demanding customers and markets, thus creating highly valued and long-lasting revenue streams,' added Ganesh Moorthy, president and chief operating officer at Microchip. 'Joining forces and combining our complementary product portfolios and end market exposure will offer our customers a richer set of solution options to enable innovative and competitive products for the markets they serve.'

The deal will see Microchip's headcount increase to nearly 15,000 globally, though neither company has yet discussed whether there will be layoffs as a result of the merger.