In the west, semiconductor companies look to big deals to boost their competitiveness in new markets; in China, it becomes an agenda item for the Communist party’s drafting of its next Five-Year Plan.
AMD agreed to buy rival Californian chipmaker Xilinx on Tuesday in a $35bn all-stock transaction, taking the value of semiconductor dealmaking to more than $100bn in 2020 in a blockbuster year for the sector.
Meanwhile, Beijing has committed to invest heavily in chips as part of its response to pressure from Washington on its industry, and the 14th Five-Year Plan taking shape this week is expected to bring more support.
As we discussed earlier this month, AMD is using its share price gain to fund its ambitions to challenge Intel and Nvidia for cloud business in data centres and expand into 5G and the Internet of Things. Lex says the timing is good with the deal coming at something of a low point for its target, which is strong in these areas.
It follows Nvidia’s acquisition of Arm for $40bn (subject to approval), Analog Devices’ purchase of Maxim Integrated Products for about $20bn and SK Hynix’s takeover of Intel’s memory business for $9bn.
In China, our analysis suggests Beijing’s priorities now include boosting its technological prowess in electronic design automation (EDA) — the software used in chip design — and in making the machines deployed in chip fabrication plants. US EDA tool makers Cadence and Synopsys have a stranglehold on the global market for advanced chips, while Applied Materials, Lam Research and KLA Tencor dominate critical segments of cutting-edge chip manufacturing equipment.
As the chart shows, these are sophisticated areas compared to the basic assembly and testing plants where China currently has the most market share. Lacking the quick fix of M&A, the country faces years of building up the talent and experience it needs to achieve its goal of producing all the chips its companies need.
The Internet of (Five) Things
1. Waymo moves into trucks
Waymo has announced a new first — working with Daimler Trucks to power big-rig lorries, as Alphabet’s driverless technology unit moves its technology beyond carrying passengers to hauling freight. At the other end of the spectrum, Daimler’s tiny Smart electric cars are helping it meet strict EU emissions targets.
2. TikTok gets Shopify’d
With social commerce finally starting to scale up in the US, TikTok users there will be able to shop as they scroll through its short-form videos. A deal this week with ecommerce platform Shopify brings the Chinese-owned app into line with social media rivals such as Facebook. Of course, there’s still that threat of a November app ban in the US over security concerns.
3. Douyin gets shopped for IPO
TikTok-owner ByteDance is in discussions internally and with investment banks to list its short video app Douyin in Hong Kong, according to Reuters. Douyin is the Chinese version of TikTok.
4. SpaceX’s ‘Better than nothing’ broadband beta
As someone currently stuck with a 2Mb/s broadband service with a 400ms “ping” in central London, this interests me. SpaceX is offering a “Better than Nothing Beta” version of its new service from its Starlink satellites, says CNBC. It will begin in the US with “50Mb/s to 150Mb/s and latency from 20ms to 40ms”. Global coverage is promised next year.
5. UK regulator unlocks mobile phones
British mobile phone networks will be banned from locking handsets to their networks after the regulator Ofcom argued that the practice confuses customers and acts as a barrier to competition. The sale of phones that cannot be used on rival networks will be outlawed in December 2021.
Tech tools — survival gadgets
Talking of satellite broadband, Fergus Scholes writes about keeping an Iridium sat phone in a waterproof Peli Case when he rowed 3,000 miles across the Atlantic with three friends. Other vital gadgets he details include Leica binoculars, a rechargeable LED torch and an MSR Guardian water purifier.
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October 28, 2020 at 04:31AM
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AMD's 5G and China's 5-year chip plans - Financial Times
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