Kevin Cassidy, Analyst with Stifel, Nicolaus & Co., says Microchip Technology Inc. (MCHP) is making acquisitions in order to remain competitive as the Internet of Things trend continues to develop.
“Microchip that has been a leader in microcontrollers that are used in all types of what is now getting to be called the Internet of Things,” Cassidy says. “So we’ll just say that they have been in things like alarm systems and smoke detectors, sprinkler systems, your garage-door opener, things like that. Now though, they need to connect to the Internet, and they have been acquiring companies that maybe have a WiFi technology that they can include with their microcontroller and even a Bluetooth technology, or just any way to get the information of the product that they’re controlling, try to send some of that information through the Internet, so it can be either controlled remotely or the data it’s picking up can be used for some other purpose.”
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Another factor driving consolidating in the semiconductor market, Cassidy says, is the fact that automotive is the fastest growing end market.
“Those companies tend to have fairly long design cycles and even long qualification cycles, and I think they’ve preferred to have fewer and very large suppliers rather than many small suppliers,” Cassidy says. “So we think there could be a trend for those customers maybe pushing their suppliers to consolidate so that they can have fewer and higher-quality suppliers.”
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