The trend of mergers and acquisitions of automotive semiconductors is becoming more and more intense, and the market pattern may be rewritten again.

According to Strategy Analytics's previous report, the top five market shares of automotive semiconductor manufacturers in 2019 were NXP (NXP), Infineon, Renesas, Texas Instruments (TI) and Italian Semiconductor (ST), with market shares of 11.3%, 11.2%, 8.7%, 8.1% and 7.6%, respectively.

But Infineon's share of the global automotive semiconductor market reached 13.4 per cent after the merger of Infineon's successful acquisition of Cypress in 2020, which had a market share of 2.2 per cent in 2019, leading to the emergence of Infineon as the global automotive semiconductor company NO.1--.

Now, this market pattern is expected to be rewritten again. Earlier this month, Samsung was revealed to be interested in buying automotive semiconductor companies, with NXP, TI and Renesas as the main targets. Previously, Samsung's position in the automotive semiconductor field is not prominent, once the rumors come true, it means that Samsung will also join the automotive semiconductor head player camp.

The development of automotive semiconductors has a broad prospect, and Samsung accelerates its layout.

In the face of the continuing shortage of automotive chips, some companies are busy expanding production, while others are busy expanding, and Samsung belongs to the latter.

Earlier this month, the chief financial officer of Samsung Electronics said on the earnings call that he would adopt an active M & A strategy in the next three years to improve competitiveness. According to people familiar with the matter, Samsung Electronics may try to acquire companies in the field of automotive semiconductors, such as NXP of the Netherlands, Texas Instruments of the United States, Renesas of Japan, Infineon of Germany, and so on.

The support behind Samsung's consideration is the huge growth potential of the automotive semiconductor market. With the automobile "four modernizations" reform gradually entering the deep water area, semiconductors are more and more widely used in vehicles. According to the Korea Automotive Technology Research Institute, conventional internal combustion engine cars use about 200 to 300 semiconductors, while for L3 or higher self-driving cars, as many as 2000 semiconductors are needed.

Because of this, with the continuous improvement of automobile intelligence and networking, the overall value of semiconductors on bicycles is getting higher and higher. According to the forecast data of Gartner, the value of semiconductors in a single car is $400 in 2018, and it is expected that the value of semiconductors in a single car will exceed $1000 by 2024. There is a lot of room for development.

However, Samsung's previous performance in the field of automotive chips has not been outstanding. Although Samsung ranks second in the global semiconductor sales data in 2020 and the latest list of the top ten semiconductors in the world, according to the data released by Gartner, the main pillar of its semiconductor business is memory chips. Samsung was inconspicuous in the field of in-car chips and didn't come to the fore until 2018.

On October 16, 2018, Samsung Electronics announced the launch of two new sub-brands: automotive chip exclusive brand Exynos Auto and image sensor brand ISOCELL Auto, to accelerate expansion into the automotive sector. Among them, the Exynos Auto brand will devote itself to three directions: Exynos Auto V, for infotainment system, Exynos Auto A, for self-driving and advanced driving assistance, and Exynos Auto T for vehicle communication. The main purpose of ISOCELL Auto products is to help cars accurately identify objects in different environments. Samsung Electronics launched a car version of smartphone image sensor ISOCELL in 2018 in an attempt to gain a foothold in the car image sensor market using the image sensor technology used by smartphones.

More than two months later, in early 2019, Samsung teamed up with Audi to officially launch its first self-driving car chip, the Exynos Auto V9. It is understood that Exynos Auto V9 is designed for advanced infotainment systems and allows content to be displayed on multiple screens for a safer and more enjoyable experience. The chip itself is based on 8nm technology and is expected to make its debut in 2021. In addition, Samsung announced in May 2019 that it would supply Exynos Auto 8890 processors to Audi and partnered with Tesla on HW 3.0autopilot chips.

However, compared with Renesas Electronics, NXP, Texas Instruments and other leading companies in the field of automotive chips, Samsung still has a big gap. Samsung Electronics, the only South Korean company active in the global automotive semiconductor market, had a market share of less than 1 per cent by the fourth quarter of 2020, according to Omdia, a market research firm.

Samsung is obviously aware of this, so it has been actively making up for its shortcomings in the past two years. For example, Samsung recently announced to further deepen its cooperation with Tesla to cooperate with the latter to develop 5nm pure autopilot chips, and it has been exposed that it has begun to transform its memory production line in Huacheng, Gyeonggi Province, for the production of CMOS image sensors, in order to enter the car image sensor market and occupy a larger share of the global image sensor market.

The news of Samsung's intention to buy automotive semiconductor companies may even have been launched as early as 2019. After Samsung announced its system growth plans that year, there were rumors that NXP, Cyrus and Infineon would be added to Samsung's merger list.

Some South Korean media have revealed that Samsung has conducted due diligence on NXP and Texas Instruments in 2019 and believes that NXP is a strong competitor for this acquisition. After all, NXP has been in contact with Qualcomm about the sale and is willing to sell. On the other hand, NXP has excellent technical capabilities in automotive application processors and infotainment, which can produce good synergy with Harman. Once the rumors of the acquisition come true, it is expected to directly put Samsung in the top position in the field of automotive semiconductors.

With the intensive blessing of giants, the wave of mergers and acquisitions in the semiconductor sector continues to break out

Looking back at the evolution route in the field of automotive semiconductors in recent years, apart from Samsung, in fact, many semiconductor manufacturers are actively strengthening the layout of the automotive field, and everyone's approach is the same, basically through acquisitions to improve the voice in the field of automotive chips, such as Intel's acquisition of Mobileye, Renesas's acquisition of IDT, Infineon's acquisition of Cypress, Ames's acquisition of Osram, and so on. Some players even successfully enter the forefront of the market with the help of mergers and acquisitions.

As a former leader in the automotive chip market, NXP's "boss" status is achieved through acquisitions. In March 2015, NXP announced the acquisition of Freescale for $11.8 billion. After the merger, NXP has a market capitalization of more than $40 billion and annual revenue of more than $10 billion, making it the world's largest supplier of automotive semiconductors until 2019.

In order to further consolidate NXP's leading position in the automotive chip field, on May 29th, 2019, the chip giant also announced the acquisition of Marvell's wireless connection business for $1.76 billion, involving the main product line of Marvell's Wi-Fi and Bluetooth and other connected products to strengthen its wireless communication strength in the industrial and automotive fields. Marvell announced on May 7, 2019 that it would buy Aquantia, for $452 million to enter the in-car network market through Aquantia's Multi-Gig Ethernet controller, and provide sufficient bandwidth for Marvell's L4 and L5 self-driving systems with the help of Aquantia's technologies.

In 2020, with the completion of Infineon's acquisition of Cypress, Cypress's product portfolio of microcontrollers, software and connection components will complement Infineon's power semiconductors, sensors and security solutions. the position of the world leader in automotive semiconductors has changed again. Prior to this, Infineon wholly acquired Innoluce, a fab-less semiconductor company headquartered in Nijmegen, the Netherlands, in October 2016 to develop chip components for high-performance lidar systems to help autopilot development. In August 2018, it was revealed that Infineon had tried to buy Italian Semiconductor, but finally gave up the idea.

In addition, Intel, Qualcomm, Ames, Renesas and other chip giants have also chosen to strengthen or cut into the auto market through acquisitions. Among them, Intel acquired Mobileye, for $15.3 billion in March 2017 to further strengthen the layout of the self-driving field. Rival Qualcomm, on the other hand, took a fancy to NXP, which tried to buy NXP for $110a share in 2016, for a total of $38 billion, and then raised the price to $44 billion under pressure from NXP shareholders.

However, Qualcomm announced in July 2018 that it had no choice but to end its acquisition of NXP and paid a $2 billion termination fee to the company because of the delay in obtaining unanimous approval from major regulators. Qualcomm has also lost an excellent opportunity to become the number one player in the auto market. But Qualcomm was not discouraged by this, but chose to continue to strengthen independent research and development to deepen the layout of the automotive business, and in the following two years successively released Snapdragon's digital cockpit platform, Snapdragon Ride "self-driving platform and other leading products, becoming an important player in the smart car industry chain.

And Renesas, following the acquisition of American chipmaker Intersil, for $3.2 billion in early 2017, announced in September 2018 that it would buy IDT, for $6.7 billion to continue to rush into the automotive chip market, such as self-driving, and recently it was revealed that the semiconductor giant was in talks to acquire Deleg Semiconductor (Dialog Semiconductor), which is expected to reach about $6 billion. It is understood that Dale Semiconductor mainly provides mixed signal chips, including power management chips, lighting chips, Bluetooth chips and so on, and was once a supplier to Apple. Renesas said it hoped to strengthen its automotive chip business through the deal.

But as Renesas said, the statement negotiated by the two sides does not mean that the acquisition will be completed, and whether the deal can be completed will need to be approved by regulators in major regions. And according to foreign media reports, in addition to Renesas Electronics, Dale is also negotiating with a number of other candidate buyers, including Italian and French semiconductors.

This means that this trend of semiconductor integration, which has lasted for several years, will continue in 2021, and it is even expected to intensify, attracting more players to join, and the competitive landscape of the automotive semiconductor market will be rewritten again. Some new head players are not ruled out.