Without more megadeals, this year’s value of planned acquisitions will probably fall short of the annual average, says new update report.

After slowing significantly in the last half of 2021, the pace of megadeals for semiconductor mergers and acquisitions regained momentum in the first six months of 2022, according to M&A data contained in IC Insights’ August 3Q Update of The McClean Report service.  So far this year, four large agreements have been announced—each valued between $1.9 billion and $9.4 billion, pushing the combined 1H22 M&A total to $20.6 billion (Figure 1), said the new 3Q Update report.

In comparison, the first-half 2021 total value of M&A agreements for semiconductor companies, assets, product lines, and related business operations totaled $18.2 billion, including four that were announced with price tags between $1.4 billion and $7.1 billion.  In the last six months of 2021, the combined value of new semiconductor M&A deals was $4.4 billion—the lowest total for the second half of a year since early last decade, according to the 3Q Update.

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2020-2022 expected to be the first 3-year period of double-digit capex growth since 1993-1995.

IC Insights has adjusted its 2022 worldwide semiconductor capital-spending forecast that now shows a 21% increase this year, to $185.5 billion (Figure 1).  The revised outlook, which was included in IC Insights’ recently released August 3Q Update to The McClean Report, represents a decrease from $190.4 billion and 24% growth that was forecast at the beginning of this year. Though lowered, the revised capex forecast still represents a new record high level of spending. In fact, if industry capital spending rises as forecast by a double-digit amount this year, it will mark the first three-year period of double-digit capital expenditure gains in the semiconductor industry since 1993-1995.

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Never-before seen decline in June IC market driven by steep drop in memory pricing.

The IC market recorded its first-ever June sequential sales decline this year, based on data from WEMA, SIA, and WSTS dating back to 1976. Typically, high single-digit or double-digit sales gains have been the pattern for June IC sales. Even in its previously weakest year (1985), June IC sales increased 1%.  Never, until this year, have June IC sales declined.

This extraordinary result was startling for at least two reasons.  First, June is a quarter-ending five week month and that alone has historically been enough to generate a sales uptick compared to the four-week month of May. Second, June is normally one of the strongest months of the year for IC sales since OEMs are buying chips to build into their new systems in time for back-to-school and end-of-year holiday sales.
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