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Analog Devices to Acquire Alif Semiconductor for $1.35 Billion

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Analog Devices to Acquire Alif Semiconductor for $1.35 Billion

Analog Devices (ADI) agreed to acquire Alif Semiconductor in a $1.35 billion all-cash deal that will add artificial intelligence-native microcontrollers and fusion processors to its lineup.

Analog Devices, which makes high-performance semiconductor chips and sensors for automotive, communications, consumer and industrial sectors, said Wednesday it may pay an incremental contingent consideration of up to $200 million.

"Combined with (Analog Devices') deep physical-domain expertise and broad analog system capabilities, we can expand our reach to deliver the solutions that can power the future of physical intelligence," Alif Co-Founder Reza Kazerounian said in a statement.

"This is the next frontier of AI: embodied and deterministic. This is physical intelligence in action," Analog Devices Chief Executive Vincent Roche said.

The semiconductor company expects to close the deal before the end of the year, subject to closing conditions.

Analog Devices' shares were up 0.3% Wednesday and have gained 34% this year.

"We are confident in our view that (Analog Devices) is buying a strong design/tech pipeline and purchasing technology that should combine well and prove complementary with (its) strong position in areas like sensors," Wedbush Securities Analyst Matt Bryson said in a note to clients Wednesday.

Earlier this year, Analog Devices acquired Empower Semiconductor for $1.5 billion and packaged software platform Vizor Technology, which is doing business as VT Electron, for an undisclosed amount.

In August, Seaport Research Partners said Analog Devices' acquisition of Empower expands its datacenter opportunity from the edges of the facility all the way to the rack, which is "significant."

There's likely to be 100 gigawatts equivalent infrastructure built for data centers between now and 2031, Roche said on an earnings conference call, according to a FactSet transcript, adding that each gigawatt generates $1 billion to $1.5 billion analog serviceable addressable market, or SAM.

"This matters because the difference between SAM and (total addressable market, or TAM) is (that Analog Devices) has products to sell into a SAM, and has to either design or acquire products to convert more of that TAM into the SAM," Seaport Senior Analyst Jay Goldberg said. "This tells us (Analog Devices') management is being very disciplined in how they talk about this market, a welcome change."

In other recent deals in the sector, power and sensing chips manufacturer ON Semiconductor (ON) agreed in June to acquire Synaptics (SYNA), which owns a portfolio of human-machine interface and wireless connectivity solutions, in a deal with an enterprise value of about $7 billion. Shareholders of Synaptics will receive 1.350 shares of onsemi for each share they own.

Price: $363.61, Change: $+0.41, Percent Change: +0.11%

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