How are the companies that have been divested by the giants doing?

Text: The semiconductor industry is vertical.

01, AMD and GFIn the early 1990s, TJ Rodgers of Cypress Semiconductor famously said, "Real men h**e fabs," meaning that chip companies should design and build their own factories.

AMD is the "real man". In fact, AMD has a longer history of having its own wafer fab than Intel, and many chip design companies have their own wafer fabs before TSMC was born to specialize in wafer foundry.

GF was born from AMD's wafer fab, and in the earliest days, it was AMD's own fab, just like Intel's fab used to produce chips for AMD's own products.

Before it was split by AMD, it did play a major role in AMD's rise. AMD's early fabs were used in its own fabs, including the famous Athlon and Athlon, the Athlon, and the Athlon. Imagine that the world's first 64-bit desktop processor came from AMD's fab, and this is also its highlight moment.

But why did AMD spin off GF? This has to do with the fact that AMD has suffered a setback in its development over a period of time.

In 2006, after AMD spent $5.4 billion to acquire the graphics core manufacturer ATI, AMD became the only company with CPU and GPU wafer factories at that time.

But at 65nm, AMD's technology is starting to lag behind Intel. In 2007, Intel adopted a new processor marketing strategy, Tick-Rock, which widened the gap between AMD and Intel in the processor market. Intel sang all the way, and AMD was losing ground one after another.

The poor market has made AMD's financial situation not very good, and AMD has also invested in the acquisition of ATI, which can be said to have made AMD's finances worse.

Now, in the external environment: first, the processor market, AMD is not performing well. Second, in the GUP market, Nvidia is coming from behind. Third, the emergence of TSMC and the emergence of the wafer foundry business essentially allows chip design companies to reduce costs and focus on design.

These changes in the environment have made AMD unable to afford the huge overhead of upgrading its fab. At this time, Abu Dhabi Advanced Technology Investment Company and Mubadala Development Company from the United Arab Emirates extended an olive branch to AMD. The Middle East tycoon and AMD hit it off, and AMD immediately spun off its own fab and established a new company called Foundry Company, which was later renamed Globalfoundries, or GF for short.

In 2008, AMD executives announced a new strategy to move to fabless.

When GF spun off from AMD in 2009, the company quickly began operations by acquiring the chartered semiconductor company and establishing a new facility in Malta, New York. With fabs spread across three continents, GF appears to be building another formidable semiconductor foundry soon, providing TSMC with an alternative and much-needed competition. However, to keep up with TSMC, critical intellectual property, packaging technology, design services, and process technology expertise are still required. It acquired all of this through the acquisition of the majority of the remaining shares of IBM Semiconductor Group in 2015, plus additional fab capacity and valuable talent.

In 2018, GF announced its decision to stop chasing Moore's Law. Today, GF has become the world's third-largest foundry.

02. Siemens and Infineon

As an important pole of the world's semiconductors, Europe mainly benefits from the "troika", Infineon, NXP, and STMicroelectronics. Among them, Infineon is at the top of the list.

In fact, Infineon was also spun off from the giant.

Infineon was formerly the semiconductor division of Siemens Group, Europe's largest industrial manufacturing company. Siemens is no stranger to us, and its origins can be traced back to 1847. Founded in Berlin by Werner von Siemens and Johann Georg Halske, Siemens and Halsk Telegraph Construction produces the pointer telegraph invented by Siemens.

In the 50s of the 20th century, with the end of the war, Siemens opened a new base in Bavaria, southern Germany, and computer and semiconductor equipment began at this stage.

In 1969, Siemens also established a dedicated division for the semiconductor business. In 1977, as Siemens prepared to enter the U.S. market, it purchased a 20% stake in AMD**, injecting cash into the company to expand its product line. Eventually, however, the two companies diverged over AMC's vision, and in 1979 AMD bought a stake in Siemens' U.S. division. At the same time, Siemens Semiconductors has also grown through cooperation and has become a world-renowned semiconductor giant.

As an important semiconductor division of Siemens, Infineon's veteran employees lived a comfortable and prosperous life with the halo of Siemens on their heads. Due to the extremely sensitive response of the semiconductor industry to market demand, huge fluctuations in performance and high capital investment, Siemens finally could not withstand the impact on its stock price and listed it independently in April 1999.

Siemens gradually weakened its position at Infineon, holding its own ** by 44 from March 20037% to 40%; By January 2004** 1500 million**, with a reduction in shareholding in Infineon from 40 percent to 18 percent; Then, in March 2006, Siemens sold the remaining 18 percent of its stake in Infineon for 1.2 billion euros ($1.4 billion)**.

Thanks to the good foundation laid by the parent company Siemens Semiconductors in the field of semiconductors, according to the analysis data published by Gartner, Infineon entered the ranks of the top 10 semiconductor manufacturers in the world when it was founded, and has remained in the ranks since then.

Infineon's momentum after listing coincides with the rise of the Internet and other high-tech industries in Europe and the United States, Google, Amazon, Alibaba, Tencent, etc., were born at this point in time, and the stock prices of Microsoft and Intel have reached an all-time high. As one of the key companies in the German high-tech index stock (TEC DAX), Infineon's stock price soared after its listing.

Infineon has inherited Siemens' outstanding and broad product portfolio, from storage to consumer electronics, from fiber optics and hard disk drives (HDD) to RFID solutions, from wired communications to wireless solutions, from automotive and industrial electronics to chip cards and security applications, as well as a wide range of communication applications.

Since its founding, Infineon has made several major moves: In 2011, the Wireless Solutions business unit was transferred to Intel. Infineon has been targeting power semiconductors and making large-scale acquisitions. In 2014, Infineon acquired an international rectifier company focused on low-power, energy-efficient IGBTs and smart power modules for $3 billion**.

In 2016 and 2019, Infineon acquired Innoluce, which focuses on autonomous vehicle MEMS and LiDAR, and Cypress Semiconductor, which is highly complementary to Infineon. From business divestitures to mergers and acquisitions, Infineon's composition continues to change, accompanied by the diversification of Infineon's shareholding structure.

03, Motorola and onsemionsemi is also a spin-off of the giant semiconductor division, and onsemi's predecessor is from Motorola Semiconductor.

Motorola is one of the world's earliest semiconductor companies, starting the semiconductor business in 1948, and in 1955, Motorola produced the world's first commercial high-power transistors for car radios, which was also the first mass production of semiconductor devices by Motorola.

In 1999, Motorola sold the component division of the semiconductor division to Texas Pacific Group in the United States, and the acquirer established a new company called "ON Semiconductor" in this component division of Motorola, and listed on the NASDAQ in 2000, Motorola only retained a symbolic 7% stake in the company.

At the beginning of onsemi's spin-off from Motorola, the main product lines included analog ICs, standard and advanced logic ICs, discrete small signal and power devices.

After the spin-off, onsemi was led by Steve Hanson, the former head of Motorola's semiconductor components division, who was determined to ship more than 18 billion units that year. As an independent company, ON Semiconductor will focus its cash flow and investments on itself, a far cry from Motorola's positioning philosophy for ON Semiconductor.

Continuous mergers and acquisitions and integration are the magic weapons of its development to this day. From 2001 to today, onsemi has acquired 14 companies in a row, making its product line very rich.

Several of these strategic acquisitions include the acquisition of an 8-inch wafer fab at LSI in 2006, which significantly improved its own process level. In 2008, ON Semiconductor acquired AMI Semiconductor, an acquisition that allowed ON Semiconductor to enhance its automotive and industrial product lines.

In August 2021, onsemi announced a 4$1.5 billion cash acquisition of silicon carbide manufacturer GT Advanced Technologies (with more accumulation in the field of silicon carbide technology). Based on the silicon carbide wafer substrate produced by GTAT, onsemi has already shipped device products in 2022. In fact, when we look back at onsemi's M&A investments, it's about building a great product portfolio and then expanding the business structure.

Incidentally, due to the high losses of the semiconductor division, in October 2003, Motorola spun off the entire semiconductor business with $200 million, and established Freescale in 2004. However, in March 2015, Freescale was merged into NXP, and in December of the same year, the Freescale brand was officially discontinued, which also announced the complete end of the era of Motorola's semiconductor division.

Today, onsemi is already a dominant player in the automotive CIS and power supply fields, with cumulative revenue of 62$3.5 billion, with cumulative revenue of 62US$2.3 billion, a year-on-year increase of 0.20%。

The cumulative net profit for the first three quarters of fiscal 2023 was 16US$2.2 billion, with a cumulative net profit of 130 billion US dollars, a year-on-year increase of 2483%。

04, Philips and NXPNXP's predecessor was Philips' semiconductor division established in 1953, when the global semiconductor industry was just beginning to sprout, and Philips can be said to be one of the first companies in the world to engage in the semiconductor industry. In the decades that followed, Philips made a name for itself in the global semiconductor industry and was one of the world's largest semiconductor producers at the time.

However, since entering the 21st century, Philips has begun to vigorously adjust its development strategy to focus on the medical and health field due to the needs of its own business development. At the same time, affected by the Internet bubble around the turn of the millennium, the global semiconductor industry was sluggish, resulting in continuous losses in Philips' semiconductor business. Under the influence of these factors, Philips decided to ** the semiconductor business. In 2005, NXP spun off from Philips and is headquartered in Einhorn, the Netherlands.

Now, NXP has become the 15th largest semiconductor manufacturer in the world, with revenue increasing by 1% year-on-year in 2023.

Conclusion

AMD spun off GF, Infineon spun off Siemens, Motorola spun off onsemi, and Philips spun off NXP symbolize the end of a history and a new beginning. Once subsidiaries thrived under the wings of giants, now they must learn to fly independently.

The fate of these sold subsidiaries was different. But regardless of the outcome, these experiences have become an integral part of their lives and shaped them to be who they are today.