AMD’s $30 Billion Deal to Tip 2020 Into a Record for Chip M&A

IfAdvanced Micro Devices Inc. issuccessful in its $30 billion bid for semiconductor makerXilinx Inc. it will push 2020 into a record year for chip deals, as large tech companies rush to consolidate the increasingly competitive industry.

There have already been more than $74 billion of deals announced in the semiconductor industry this year, led byNvidia Corp.’s $40 billion bid for Cambridge, England-based chip designer Arm, according to data compiled by Bloomberg. The Xilinx deal would make 2020 the biggest year on record for announced deals involving semiconductors, the data show, surpassing the previous record in 2015.

Read More: AMD Is Said in Talks to Buy Rival Xilinx in $30 Billion Deal

Competition in the semiconductor industry is heating up as companies that were once customers, such asApple Inc., begin designing their own chips, while established chipmakers like Nvidia are branching out into new niches. With theArm deal, Nvidia gets access to semiconductor designs that are in the vast majority of the world’s smartphones and licenses for chips that run appliances in the internet-of-things.

“AMD’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.”

Anand Srinivasan, analyst, Bloomberg Intelligence

Buying San Francisco-based Xilinx would give AMD access to programmable chips for wireless telecommunication networks ahead of phone carriers’ plans to build out high-speed fifth-generation mobile networks. It would also help the company break into the profitable market for data-center computer components, currently dominated byIntel Corp. The deal could come together as early as next week, though talks remain in flux, people familiar with the matter have said.

These rivalries have made the industry stand out in an otherwise sluggish deal market. Overall, mergers and acquisitions are down about 29% worldwide from the same period last year at about $1.7 trillion, Bloomberg data show.

— With assistance by Fareed Sahloul

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