|Bid||71.32 x 800|
|Ask||74.10 x 900|
|Day's Range||72.08 - 74.09|
|52 Week Range||41.93 - 74.87|
|Beta (5Y Monthly)||1.33|
|PE Ratio (TTM)||30.01|
|Forward Dividend & Yield||N/A (N/A)|
|Ex-Dividend Date||Aug 26, 2020|
|1y Target Est||N/A|
Shareholders of both Analog Devices (ADI) and Maxim have recently green-lighted the proposed merger of both the companies.
(Bloomberg Opinion) -- It looks as if 2020’s chip merger mania isn’t going to stop anytime soon. We’ve already seen the $21 billion tie-up between Analog Devices Inc. and Maxim Integrated Products Inc., followed by Nvidia Corp.’s $40 billion planned takeover of Arm Ltd. Now comes word that Advanced Micro Devices Inc. is in advanced talks to buy Xilinx Inc. in a transaction that could value the target at $30 billion. The first two deals make decent sense; I am not so sure about this latest one.The semiconductor industry is undergoing a wave of consolidation as companies look to achieve greater market heft and offer customers a broader range of integrated products. The merger of Analog and Maxim unites the No. 2 and No. 3 players in the analog chip market, creating a more formidable competitor while offering opportunities for the combined company to cut costs. Nvidia — which is big in the market for graphics chips used in cloud computing, artificial intelligence and video games — sought Arm for its know-how in general-purpose processors, a core component it needs to offer integrated computing systems. An AMD-Xilinx transaction lacks these sort of obvious synergies or strategic rationales.First, the two companies couldn’t be more different. AMD is a leading maker of central-processing units (CPUs) and graphics processors, which are used for some of the hottest growth markets and aimed at both consumers and companies. In contrast, Xilinx makes specialized chips called FPGAs that can be reprogrammed and are primarily used for industrial and defense applications.While AMD has been on a tear, Xilinx has been struggling. AMD’s sales rose 26% in its June quarter from a year earlier; revenue at Xilinx revenue fell 14% in the same period. AMD’s shares were the No. 1 performers in the S&P 500 Index in each of the last two years and are up more than 80% again this year, while Xilinx stock has lagged. AMD has been thriving by offering better-performing and more power-efficient chips, winning more of the market from its main competitor Intel Corp., which has faltered on manufacturing delays. AMD advanced over Intel in every major CPU segment during the June quarter, according to Mercury Research, with its overall share of the CPU market rising 3.5 percentage points from the prior quarter to 18.3%.As a result of its chip technology advantages, AMD is likely just getting started and on the cusp of a multiyear growth opportunity in the key computer desktop and server chip markets. And that is why this deal is so perplexing. Why mess with a good thing and risk getting distracted? A $30 billion transaction would represent about a third of AMD’s roughly $100 billion stock valuation and likely require some sort of equity component. Why give up a significant portion of your market capitalization for Xilinx, which is not growing and in totally different markets? Perhaps AMD should revisit the strategy that made it so successful in the first place. In 2018, CEO Lisa Su told PC Mag that when she first took over AMD’s top role four years earlier, she decided it was important to focus the company on making high-performance computing chips (CPUs and graphics) and cutting back resources on everything else. Meanwhile, Intel chose to acquire many companies in disparate areas — including Xilinx’s main competitor Altera Corp. in 2015 — which may have played a role in distracting its management from focusing on its core products.AMD should consider that sometimes doing nothing is the best move and stick to the laser-focused strategy that is working.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tae Kim is a Bloomberg Opinion columnist covering technology. He previously covered technology for Barron's, following an earlier career as an equity analyst.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Advanced Micro Devices Inc. is in advanced discussions to buy Xilinx Inc. in a takeover that could be valued at $30 billion, according to people familiar with the matter.The deal could come together as early as next week, though things remain in flux, the people said, asking not to be identified discussing a private deal.A combination with Xilinx would give AMD Chief Executive Officer Lisa Su more of the pieces needed to break Intel Corp.’s stranglehold on the profitable market for data-center computer components. It would follow moves by rival Nvidia Corp., which bought Mellanox Technologies Ltd. and aims to use its pending acquisition of Arm Ltd. to grab more of that business.Acquiring Xilinx, which makes programmable chips for wireless networks, would also help AMD expand into a new market just as telecommunications carriers spend billions to build fifth-generation, or 5G, networks.Read more: Watch Chip Stocks Again on NXP Beat, AMD-Xilinx Takeover ReportWhat Bloomberg Intelligence SaysAMD’s interest in Xilinx is both a shield and a sword against Intel’s diverse data-center computing assets, Nvidia’s GPUs, Mellanox’s assets and its potential purchase of U.K.-based Arm. Xilinx’s FPGAs would expand AMD’s computing variety, widening its CPU and GPU capability into AI and networking. The deal may also be financially accretive.\- Anand Srinivasan and Marina Girgis, analystsClick here for the research.A Xilinx takeover furthers an industry consolidation that’s quickened in 2020. Deal activity in the chip sector has surged this year, including Nvidia’s proposed $40 billion purchase of Arm. With both of the possible acquisitions, the value of pending or completed semiconductor deals in 2020 would top $100 billion, the highest in at least 10 years, according to data compiled by Bloomberg.Xilinx, based in San Jose, California, makes field programmable gate arrays, or FPGAs. That kind of chip is unique because its function can be altered by software, even after it’s been installed in a piece of machinery. Xilinx’s chips have historically been used in telecommunications equipment, but under CEO Victor Peng the company is expanding into products targeted at data centers -- where FPGAs can be used to accelerate workloads such as artificial intelligence. The other major supplier of advanced FPGAs is Intel, which acquired its market position through the purchase of Altera Corp. in 2015.Representatives for AMD and Xilinx declined to comment on the negotiations, which the Wall Street Journal first reported.Xilinx shares rose 16% in pre-market trading in New York on Friday, while AMD shares fell 2.6%. Xilinx closed at $105.99 on Thursday, at the time giving it a market capitalization of $25.9 billion, about a quarter of AMD’s value. Shares of Santa Clara, California-based AMD closed at $86.51. The stock has almost doubled this year.Under Su, who took the helm in 2014, AMD has surged back from the brink of failure. It’s made gains against longtime rival Intel in desktop computer processors and laptops. The company is also working to reverse its fortunes in the server business, where chips can cost as much as a small car. For years, Intel had relegated AMD to less than 1% of that market.AMD’s interest in Xilinx reflects the increasing demands of cloud-services providers such as Amazon.com Inc. and Alphabet Inc.’s Google. Those companies are spending heavily on new data centers to meet the surge in demand for computing power delivered via the internet. They’re also racing to enhance services, such as search, with artificial intelligence software, and many companies are experimenting with building their own hardware to do so. That’s putting greater pressure on chip providers to advance their offerings.AMD-Xilinx Combo Helps Cloud Diversify From Intel, Nvidia: ReactFor AMD investors, how the company intends to finance the deal may prove crucial in persuading them to sign off. The chipmaker has only recently shed concerns about its cash reserves and was haunted by debt incurred from a takeover of graphics chipmaker ATI Technologies in 2006. At the end of its most-recent quarter, AMD had cash and equivalents of $1.8 billion, less than several other chipmakers.Nvidia is using stock to partially fund its purchase of Arm, while Analog Devices Inc.’s acquisition of Maxim Integrated Products Inc. is an all-stock deal. That partly reflects a huge run-up in the value of chip companies in recent years, lead by AMD and Nvidia.Xilinx shares have not rallied as much. The stock is up 8% this year compared with a gain of 27% by the Philadelphia Stock Exchange Semiconductor Index. AMD has surged nearly 90%, making it the second-best performer, behind Nvidia.The approval of chip-industry transactions has been complicated by the ongoing trade war between China and the U.S. The Asian country is the biggest purchaser of chips and America is home to the biggest group of producers.(Updates with shares, chip sector deals and analyst’s comment from the fifth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.