Analogue gets smart with Dialog bid for Atmel

In May we saw Avago making its takeover move for Broadcom. Although the Avago/Broacom deal was much larger than the Dialog/Atmel deal the logic is the same. Analogue buys digital.

Are we seeing a readjustment in the trend of the last decade which has seen those chip firms which can, switch their focus from digital to analogue in the search for higher margins?

The semiconductor industry has  re-invented analogue, as the crucial and difficult‑to‑produce element in all electronics products. But make no mistake, digital signal processing is still the essence of electronics design.

In the past, perhaps we saw the digital companies to acquiring smaller analogue businesses to develop intelligent analogue products. An example of this was Altera’s acquisition of power chip firm Enpirion.

But now we are seeing analogue firm’s buying digital firms, and more significantly, buying larger digital firms. The reason is that analogue firms are more profitable than their digital counterparts.

We are now moving into world of intelligent analogue and smart power.

The main areas of analogue design – comms, wireless, sensors and power – are being integrated with a processor for optimisation and control.

Then you throw the internet of things into the mix and need to make your analogue chips, wireless transceivers and sensors –  more intelligence becomes not just desirable, it is vital.

The capabilities of the processor still define the function of an IoT device or system; be it a smartphone or a smart sensor.

Both Dialog and Avago have been quietly adding companies and technologies which sit around their core analogue chips. Another firm doing this is ams of Austria.

What Dialog and Avago have now done is bid big money for big name digital firms. This was always going to draw them into the spotlight.

The pressure will now be on them to make the integration of the digital and analogue sides of the business work together.

Adding a MEMS sensor business or GaN power technology to you analogue business is one thing. Adding an ARM-based processor portfolio is likely to be a much bigger challenge to the analogue firms.

But if they are successful, the potential rewards could be considerable.