Industry Consolidation Continues

On the heels of the Qualcomm/Atheros acquisition, on January 10th, 2011, SMSC and Conexant Systems, Inc. announced the signing of an agreement under which SMSC will purchase Conexant in a stock and cash transaction valued at approximately $284 million.

Conexant’s imaging, audio, embedded modem and video products will be combined with SMSC's connectivity solutions targeting the computing, consumer, industrial and automotive markets. Christine King, President & Chief Executive Officer of SMSC expects the combined companies will lead to significant operating efficiencies and help position SMSC to increase earnings growth, increase R&D productivity and drive profitability and shareholder value.

Conexant was once an unwanted stepchild of Rockwell International. In spite of a lack of attention by Rockwell, at one point in the mid 1990s Conexant utterly dominated the dial-up modem chip business. When it became obvious that dial-up modems were going to be supplanted by cable or DSL modems, Conexant couldn’t decide which to support and ended up losing technology leadership in the broadband modem market. Since then, Conexant has lacked strategic direction. The company spun off their manufacturing into Jazz Semiconductor, now Tower Semiconductor. In addition Skyworks Solutions, Inc. and Mindspeed Technologies were spun out of Conexant in the early 2000’s. Conexant also sold its broadband access business to Ikanos Communications and its broadband media processing business to NXP Semiconductors.

SMSC is an aggressive, strategically focused company that has succeeded by filling market niches others have overlooked or neglected. The acquisition of Conexant roughly doubles SMSC’s revenues. If SMSC can bring the same focus to Conexant’s products that it has applied to its own products, then this is a good acquisition for SMSC.

Morry Marshall, Vice President, Strategic Technologies
Joanne Itow, Managing Director