what is the boost in the semiconductor mergers and acquisitions boom

Semiconductor market, the recent merger of the frequent occurrence of. In this regard, bright Guide (mentor graphics) International Executive C. long Walden Rhines think, the present low interest rate environment is fueling a catalyst of the merger and acquisition spree; however, the next few years as interest rates rise. The company has low cost of capital will become not easy, merger and acquisition boom gradually cooling.

Rhines analysis, there are three kinds of merger reason common market. The first to exploit economies of scale, by means of merger and acquisition (M & A) can increase the yield, and lower marginal cost; the second to improve the advantage of the financial lever, the post merger can get money at low interest rates, to the flow of funds and preferential rates; finally is the government policy to promote, for example, China has proposed five - year plan for the development of the semiconductor industry, to about $200 billion in funds to invest in domestic and foreign markets, and acquisition semiconductor companies.

Rhines further explained that currently on the market the merger boom, a big reason from in through low interest rates get low cost of capital. When a business is easy to obtain low-cost capital, they want to take these capital to operate. But this trend may be too few years will change, because interest rates will eventually be improved, and when the enterprises do not have a lower cost of capital operation, in consideration of merger and acquisition, we must return to the nature of the surface. Is the merger of enterprise strategies, financial, economic scale, and the difference of labor division of any help, rather than like the current funds to obtain relatively low cost, to take advantage of the low cost of funds to carry out the operation of the financial.

Rhines believes that each enterprise has own merger consideration, some is to expand more large-scale, but some enterprises is the needs of more characteristics of division of labor and product differentiation. Therefore, when the enterprise merger and acquisition from consideration in their own business, decided this way is not suitable for the development of the company. For attention to product design of small and medium sized companies, small scale operation sometimes but more flexible, more high execution efficiency, can play a better idea, therefore does not have to follow the merger boom.

As the merger boom in recent years, the market for the development of electronic design automation (EDA) will have obvious influence, Rhines mentioned, the semiconductor industry over the years spent in the amount of research and development about accounted for 14% of the overall market value, over the years didn't change anything; and spent each year on the figures for the EDA tools, basically did not change much, so current wave of mergers and acquisitions, the EDA industry did not too big impact.