MediaTek said Monday it would acquire power management chipmaker Richtek Technology for NT$28.96 billion (US$879.3 million) in cash, Taiwanese media reported.
MediaTek’s acquisition follows NXP Semiconductors acquiring Freescale and Avago Technologies merging with Broadcomm Corp earlier this year.
“The semiconductor industry is consolidating in terms of technology,” MediaTek chairman Tsai Ming-kai said at a press conference. Under such circumstances, every company in the supply chain needs to think how to reposition itself in the industry,”
“Collaborating with Richtek will help us have greater influence in the system chip market and to enhance our capabilities of developing power management ICs,” Tsai added.
In the first half of the year, semiconductor acquisition agreements totaled US$72.6 billion, six times the annual average for M&A deals struck from 2010 to last year, according to IC Insights.
MediaTek plans to compete its buyout of Richtek in the second quarter of 2016. The acquisition will be conducted in two stages. Richtek will be delisted from the main bourse and operate as a fully owned subsidiary of MediaTek after the transaction is complete.
The acquisition of Richtek will add 5 percent to MediaTek’s annual net profits, but increase costs as MediaTek will use nearly 20 percent to 25 percent of its net cash to acquire the company, according to Yuanta Securites.
Richtek, whose clients include Samsung Electronics, last year made NT$1.5 billion in net profit on revenue of NT$11.93 billion.
Meanwhile, MediaTek posted its strongest monthly revenue last month since March, earning NT$19 million, an increase of 6.1% from NT$17.91 billion in July.