• Insight Bite

    Chip revenues surge on global shortage

Renesas seeks diversification with Dialog play

As the automotive industry struggles with a global chip shortage, Reading-headquartered chip supplier Dialog is being acquired by the world’s largest automotive semiconductor maker: Renesas Electronics.

Dialog and Renesas have been working together for over a decade, and the $6bn cash deal will see the Tokyo headquartered Renesas absorb Dialog’s extensive portfolio of wireless communication products. This is focused on low-power embedded chips, and includes the transceivers used by Apple for the latest 5G iPhones.

Renesas, which also supplies Apple, is expected to use this portfolio to both consolidate control in the automotive market and expand beyond it. Many of Dialog’s chips are critical to the emerging generation of electric and connected vehicles. Applications include low-power connectivity solutions for auto interiors, driver assistance, climate control, security, and battery management. Beyond the automotive sector, Dialog’s low-power connectivity chips could also help Renesas better serve the industrial IoT market and diversify into 5G.

“We have built a strong foundation of high-performance analog and power efficient mixed-signal expertise, extended our product portfolio and applied our technologies into markets including 5G, wearables, automotive, smart home, connected medical and industrial IoT” said Dr. Jalal Bagherli, CEO of Dialog. “This compelling platform – combined with Renesas’ leading embedded compute, analog and power portfolio – creates even greater growth opportunities.”

Renesas, which has ramped up prices and production amidst a global shortage of automotive chips, will now be well-positioned to serve demand from the emerging connected cars market. This looks set to explode as electric and autonomous cars become standard in the coming decade.

In the past year, several other chip manufacturers have used acquisition to get stronger footholds in this growing market. Analog Devices’ cited automotive strength as one reason for its acquisition of Maxim for $21 billion in July 2020, and Nvidia’s proposed $40 bn acquisition of ARM would complement its autonomous vehicle initiatives – if the deal is approved.

“We have gotten to know the Dialog team well when they acquired Creative Chips. This deal helped them strengthen their capabilities in mixed signal and also improved their access to the German Mittelstand industrial base. Together with Renesas they are now very well positioned to capture substantial value in the future – as anyone who has invested in Dialog a bit over 10 years ago will attest to.”

Matthew Byatt | Managing Partner

Matthew is a Co-Founder and Managing Partner at Acuity and leads the Acuity Advisors’ Deeptech practice.

Matthew has held senior leadership and corporate finance positions with some of the UK’s most successful and influential technology and consultancy companies. Roles with ARM, McKinsey and Cadence have given Matthew an exceptional insight into the world’s most successful businesses and a number of the UK’s eminent start-ups, underpinning his success at Acuity.

Matthew has considerable experience across a broad range of technology sectors throughout the UK, US and Asia, ranging from nanotechnology, semiconductor and cleantech to digital media and internet businesses. It’s experience that has given him a robust, well-developed and international network. Having also run and successfully exited his own business, Matthew has a deep understanding of the financial and emotional aspects of this demanding process, bringing a unique and authoritative perspective to each business sale.

One of Matthew’s strengths is understanding complex technical value propositions, one of the benefits of training as an electronic engineer. He gets to the heart of what drives a company’s value and communicates this persuasively to potential buyers and investors. Matthew understands a buyer’s motivation intuitively and delivers a compelling rationale for why a business sale should be of strategic interest. His insight consistently yields higher deal values and results in great successes for his clients.

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