Deal gives Dialog a lift in IIoT
Dialog Semiconductor, the Reading-based chip and circuit specialist and Apple partner, has agreed to buy Germany’s Creative Chips GmbH – a fabless chip firm and Arm-approved design partner – for $80 million cash.
Bingen, Frankfurt-headquartered Creative Chips was founded in 1999. The company remains comparatively small, with expected revenues of $20 million in 2019, but offers advanced application-specific integrated circuit (ASIC) or custom chip design for automotive and industrial partners.
Alongside chip design, serial production and automated testing of high performance ASICs, it offers application specific standard ICs (ASSPs); primarily to the smart buildings and industrial sector.
The deal, Dialog emphasised, gives it a foothold into the the rapidly growing Industrial Internet of Things (IIoT) market.
Jalal Bagherli, CEO of Dialog said: “The addition of Creative Chips and its team of highly experienced and talented engineers will help to further diversify Dialog’s product revenues, customer base and end markets by extending our reach in the industrial sector.”
Dialog, which last reported earnings on July 30, hit revenues of $336 million for the quarter. In April 2019 it agreed a deal to license power management technologies and transfer over 300 employees to customer Apple.
Factoring out the benefits of that deal, it reported operating profit of $82.1 million in its second quarter; up 95 percent on Q2 2018.
Both Dialog and Creative Chips operate fabless semiconductor business models with a focus on mixed-signal products and technology.
The acquisition provides Dialog with a “rich portfolio of core IC products and a broad library of relevant analog, digital and RF technologies” the company said today, adding: “[The deal] includes the addition of an experienced engineering team with a wealth of unique skills.”
The acquisition, Dialog noted, gives it “an impressive set of top-tier industrial customers with trusted relationships that have been built over the course of nearly 20 years”, saying that this will extend its sales reach across existing wireless low power connectivity, configurable mixed-signal and power management ICs and provide the foundation for its planned expansion into the broader Industry 4.0 market.
Creative Chips will receive an additional $23 million if it hits revenue targets in 2020 and 2021.