Infineon Acquires Cypress for $10.1 Billion to Bolster IoT Position

Infineon Technologies this morning announced that it had signed a definitive agreement to acquire Cypress Semiconductor for $10.1 billion. Infineon expects that Cypress’ complementary portfolio will strengthen its position in the internet of things (IoT) and industrial sectors and become the number one supplier of chips to the automotive market.

The acquisition will give Infineon access to the roughly 5,800 employees of the San Jose based company. Infineon views Cypress’ products as complementary to its own offerings. The German company plays a leading role in power semiconductors, sensors, and security solutions, but it is attracted to the strong position of Cypress in microcontrollers, software and connectivity (such as Wi-Fi and Bluetooth).

Reinhard Ploss, CEO of Infineon, said in the press release: “With this transaction, we will be able to offer our customers the most comprehensive portfolio for linking the real with the digital world. This will open up additional growth potential in the automotive, industrial and Internet of Things sectors. This transaction also makes our business model even more resilient. Together, we will continue our shared commitments to innovation and focused R&D investments to accelerate technology advancements.”

Cypress for its part, said that it received interest from several companies, but did not elaborate further.

Infineon is squarely targeting the growing IoT and automotive markets with this acquisition. As an example, Infineon says that the power savings control from Cypress allows for longer battery life, and the connectivity products of Cypress are combined with Infineon’s own security expertise. By bringing both companies’ portfolios together, Infineon expects to be able to offer its customers more comprehensive solutions and to serve a broader spectrum of applications, such as in the smart home and connected car. It expects the synergies to open up $1.7 billion in revenue long-term, and cost savings of $200 million per annum by 2022.

Based on the 2018 figures, Infineon expects to become the top leader in chips for the automotive industry with this deal. It will also enter the top 10 semiconductor companies in the world by revenue, in the 8th position. The German company itself is valued at roughly $20 billion, and last year it generated $9.0 billion in revenue, compared to just under $2.5 billion for Cypress.

As always, the acquisition is subject to customary closing conditions and regulatory approvals, as well as approval by Cypress' shareholders. The companies expect to close the transaction by early 2020.

The present announcement is not the only semiconductor acquisition that has been announced recently. Marvell was involved in three acquisitions last month, and GlobalFoundries has sold two fabs in the first half of this year.