Texas Instruments announced on April 4 that it plans to buy National Semiconductor for US $6.5 billion in cash. This deal brings together two semiconductor industry veterans who are also two of the largest analog chip vendors. TI, founded in 1947, boasts a portfolio of 30,000 analog products while National, founded in 1959, has 12,000.
Adding National’s $1.42 billion revenue to its 2010 sales of $13.97 billion should bump up TI to third place in the global semiconductor industry, behind Intel and Samsung Electronics and just ahead of Toshiba. This is no doubt big news in the semiconductor industry.
But what does this mean for employees?
Job carnage is usually inevitable in aftermath of an acquisition. In the case of a huge merger like TI and National’s, the stakes are even higher. Industry analysts were shocked by the merger announcement given the degree of overlap between the two companies’ analog offerings. If the companies decide to weed out these redundancies, it could translate to engineering job losses. What’s worse, TI has already undergone layoffs recently—the company laid off 3400 employees in 2009, reducing its workforce by 12 percent.
However, TI spokesperson Kristina Arnold says, "TI’s goal is 100 percent retention of the product, engineering, manufacturing and sales functions." In a conference call with investors, Richard Templeton, TI’s president, chairman and CEO, said that the two companies’ product lines are pretty different upon closer inspection. Both are strong in the area of analog communication chips, but National focuses on making such chips for industrial applications, while TI focuses on the consumer market. He also said that National’s engineers would be able to work independently on new product lines.
Another piece of good news is that TI intends to keep National’s fabs in Greenock, Scotland and South Portland, Maine. Arnold adds: "TI’s plan is to not only keep, but invest in National’s Santa Clara headquarters, wafer fabs in Scotland and Maine, and assembly/test operations in Malaysia. Once the deal is finalized, Santa Clara will remain the hub of the National business unit. It also has the added benefit of giving TI an established presence in Silicon Valley, which is an important talent base for future analog design engineers."
Steve Ohr, a semiconductor industry analyst with Gartner, says that he doesn’t foresee any engineering or manufacturing job losses in the near future. TI has identified a US $100 million redundancy in sales, general and administrative (SG&A) expenses, he says, which could mean job cuts for employees in those areas.
Indeed, Templeton is reported to have said in the conference call that there will be some job losses as the companies’ administrative activities merge. And maybe tech employees can take heart from another recent merger: analog and mixed-signal chip maker Microsemi’s buyout of FPGA-maker Actel, which resulted in SG&A and marketing job cuts.
The past two years have been rocky for the tech industry in the US and abroad, with massive layoffs at IBM, Intel, Microsoft and TI. Another series of job cuts at the now third-largest chipmaker is probably the last thing we want to hear. Let’s keep our fingers crossed.