The total value of mergers and acquisitions in the semiconductor industry set an all-time high of $118 billion in 2020, according to a report by semiconductor market research firm IC Insights.

The report pointed to five mega-agreements, along with more than a dozen smaller deals, that pushed the total M&A value over the previous record of $107.7 billion set in 2015.

Announced in July, September and October, the five deals had a combined value of $94 billion to take up about 80 percent of the year’s total.

The M&A value of world semiconductor industry stood at little over $2 billion in the first half of last year as the first waves of the COVID-19 pandemic sank the global economy, IC Insights said. The deals had a combined value of just $352 million in the second quarter with countries going into lockdowns.

But a wave of enormous M&A agreements kicked off in July, as US-based Analog Devices made an announcement that it would buy Maxim Integrated Product, another US company, for $21 billion in stock.

Analog Devices expects the buyout to be completed by the summer, IC Insights said, and the company believes the acquisition will enhance its market share in analog and mixed-signal integrated circuits for automotive systems, power management and application-specific integrated circuit designs.

Global graphics processor leader Nvidia picked up the pace with its announcement of a $40 billion agreement to buy processor-design technology supplier Arm in the UK from Japanese holding company Softbank in September. It was the largest semiconductor acquisition in history, the report said.

The prospects of Nvidia owning Arm, its design cores, instruction sets and microarchitectures have raised concerns among major system-on-chip processor developers, including Samsung, Apple and Qualcomm, that license the technology.

Nvidia quickly pledged to maintain Arm’s independence in regards to licensing its intellectual property to other integrated circuit suppliers and systems makers. Nvidia expects to complete the acquisition by March 2022, but has to win clearance from regulatory agencies in South Korea, Japan, China, the US, the UK and European Union.

October put the icing on the cake of the record-setting year for semiconductor M&As.

Intel announced the sale of its NAND flash memory business and 300mm wafer fabrication plant for producing microchips in China to South Korea’s SK Hynix for $9 billion.

Advanced Micro Device also released a deal to buy American programmable logic leader Xilinx for about $35 billion in stock. The acquisition is scheduled to be completed by the end of 2021.

In later October, Marvell Technology made it known that it would acquire high-speed interconnect and mixed-signal integrated circuit supplier Inphi in Silicon Valley for $10 billion in stock and cash. The buyout is expected to be done in the second half of this year.

“As in recent years, semiconductor acquisitions in 2020 were driven by large IC (integrated circuit) companies looking to sharpen their positions in emerging and high-growth market opportunities, such as embedded machine-learning and AI capabilities, self-driving cars, all-electric vehicles, expansion of data centers for cloud-computing services and proliferation of the sensors and systems connected to the Internet of Things,” IC Insights said. “Industry consolidation also continued to play a key role in many of the 2020 acquisition agreements.”

By Kan Hyeong-woo (hwkan@heraldcorp.com)