As we noticed at January’s CES conference, car tech is taking off in a big way this year. More than any other time in the history of CES, car manufacturers showed up to show off all the advancements they have made in tech. Microchip Technology’s buy today will tap into this trend because Standard Microsystems (SMSC) manufactures chips that control data transfers in many cars, including models for BMW, Audi, and Daimler.
“SMSC is the leading vendor of media networking technologies for automobiles, with over an 80 percent share in the luxury market,” Thinkequity analyst Sujeeva De Silva told Reuters. “But it’s moving fast in the mainstream market in cars like Toyota, Volkswagen and GM.”
Microchip Technology will pay $37 per share for SMSC, or about a 41 percent premium over SMSC’s close of $26.24 on Tuesday. That’s a decent premium, but the company signalled that it needs to expand in the auto market before it missed its ideal chance.
“We believe SMSC’s smart mixed-signal connectivity solutions aimed at embedded applications are an ideal complement to Microchip’s embedded control business,” Microchip President and CEO Steve Sanghi said in a statement. “This acquisition will expand Microchip’s range of solutions as SMSC contributes exciting new products and capabilities in the automotive, industrial, computing, consumer, and wireless audio markets, significantly extending our served available market.”
Car picture from CES: Kevin Krejci/Flickr
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