It is no secret that the semiconductor industry is in a serious consolidation wave. In 2015 and into 2016, the number of mergers has been difficult to count. The tally is literally into the tens of billions of dollars worth of companies that have been acquired into larger chip companies. Some investors, analysts and portfolio managers believe that the great chip consolidation phase is not yet over.
In a brief CNBC appearance, Kevin Landis, a portfolio manager for the Firsthand Funds portfolio, detailed four chip and chip-related companies that could be acquired. There is of course no assurance that all or any of them will become acquisitions, but that is the risk in any bait shop targeting.
Firsthand Funds is a tech-focused investment management firm that dates back to 1994 and used to be known as the SiVest Group. Landis talked up growth and value stories on Wednesday. He spoke of four consolidation candidates (meaning M&A bait) that could be rolled up by larger players. These are small to mid-cap stocks in the chip space.
24/7 Wall St. took a look at these four companies because of the waves of consolidation in every single aspect of the semiconductor space. We included a description of what the companies do so investors know why they might be attractive. We went further into the actual earnings and additional color given directly by each company. Also included is trading history, valuation metrics from analysts and the actual market cap of each.
Landis is chief investment officer and manages the Firsthand Technology Opportunities Fund (TEFQX). As of April 30, its one-year performance was −12.34%, but its 10-year performance (which of course includes the hard times of the recession) was over 9%. There is also the Firsthand Technology Value Fund Inc. (NASDAQ: SVVC), which is a closed-end publicly traded venture capital fund that invests in technology and clean tech companies. As of April 30, the closed-end fund’s estimated net assets of the fund were approximately $168 million.
These are four chip companies considered to be prime targets for M&A activity. There are of course other chip companies that have been rumored M&A targets on and off over the years, some less known and some equally known or even better known.
Integrated Device Technology
Integrated Device Technology Inc. (NASDAQ: IDTI) designs and makes many chipset solutions for communications, computing, consumer, automotive and industrial components. While Landis named it as potential buyout bait, this is a company that has been speculated as takeout target quite literally for years — even in the 1990s. Its current market cap is $3.1 billion.