Renesas agrees to buy power management company dialog semiconductor

Japanese semiconductor giant Renesas is acquiring U.K.-based integrated circuit provider Dialog Semiconductor for nearly $6 billion.

Renesas, a leader in the automotive chip space, announced this week that it plans to acquire U.K.-headquartered Dialog Semiconductor in a deal worth nearly $6 billion.

Dialog Semiconductor is known for its power management solutions that serve in-demand markets such as automotive, 5G, IoT, and wearables. In 2019, the company generated $1.5 billion in revenue—primarily dominated by its custom mixed-signal segment, consisting of power management ICs, lower power PMIC, battery management systems, and display PMIC. Advanced mixed-signal sales and connectivity and auto sales claimed 18% and 13% of the company’s overall 2019 revenue, respectively. 

In 2018, Dialog signed a $600 million licensing deal to transfer its power management patent licenses, assets and 300 employees to Apple. The agreement enabled the company to refine its business focus on custom mix-signal and automotive products. 

Renesas announced the acquisition on Feb. 8, offering 67.50 euros per share—a total equity value of approximately 4.9 billion euros (equivalent to around $5.9 billion USD). The company expects the acquisition will yield incremental revenue growth of $200 million (non-GAAP operating income) from cross-selling and combining Dialog’s low-power and connectivity products with Renesas’ MCUs, SoCs and MPUs. 

The merger of portfolios will diversify Renesas’ portfolio across its automotive, industrial, IoT and infrastructure end-markets, the company stated in an investor presentation. 

Renesas generated 718.2 billion yen (around $6.9 billion USD) in revenue in 2019, dominated by its automotive and industrial, infrastructure and IoT segments.

Renesas President and CEO Hidetoshi Shibata stated in a press release that the Dialog acquisition reflects the company’s plan to achieve “substantial strategic and financial benefits” following its previous acquisitions. 

Renesas acquired semiconductor firm Intersil in 2017 and analog mixed-signal supplier Integrated Device Technology in 2019. The acquisitions boosted Renesas’ combined analog, power and embedded processing lineups, now amounting to more than 210 solutions for industrial, infrastructure, automotive and consumer markets. 

Dialog has made a few acquisitions of its own in the past few years. In June 2020, it closed the acquisition of IC manufacturer Adesto Technologies as a part of its expansion into the Industrial Internet of Things (IIoT) market. And, in October of 2019, Dialog acquired German IC supplier Creative Chips for $80 million, boosting its segment for low-energy IoT devices. 

In the announcement, Dialog CEO Jalal Bagherli cited the company’s long-term diversification strategy, building on the foundations of its high-performance analog and power-efficient mixed-signal expertise and expanding into 5G, wearables, automotive, smart home, connected medical and industrial IoT markets. 

Bagherli added, “This compelling platform – combined with Renesas’ embedded compute, analog and power portfolio – creates even greater growth opportunities in increasingly connected world.”