There is no technology play in the case of Canyon Bridge acquisition of Lattice—this is purely a financial play.
Programmable chip maker Lattice Semiconductor, considered to be one of the last independent FPGA companies today, is being acquired by Canyon Bridge Capital Partners for an estimated ₹8,666.09 crore ($1.3 billion). The price is inclusive of Lattice's net debt, or ₹553.30 ($8.30) per share in cash, representing a 30% premium to Lattice's final trade price prior to the announcement.
Canyon Bridge Capital Partners is a newly formed, global private equity buyout fund that is headquartered in Palo Alto, California. Its limited partners in the fund come from Beijing-based China Reform Fund, according to a Reuters report.
This latest acquisition leaves Xilinx as "the last man standing" with regard to the larger FPGA players. Actel was acquired by Microsemi in 2010 and Altera was acquired by Intel in 2015. In both of those cases, there was a technology play behind the story. Microsemi is big in security, and Actel's Flash-Based SmartFusion SoC FPGAs can play a big role in the secure boot process, for example. Meanwhile, Intel is huge in CPUs, and the combination of these CPUs with Altera's FPGAs—as separate devices, mounted in the same package, or, ultimately, fabricated on the same die—will be very important with regard to applications like high-performance computing (HPC).
In early 2015, Lattice acquired Silicon Image, touting the advantages of having both an FPGA and ASSP play. One of the first offspring from this marriage was the CrossLink family of video bridge pASSPs (programmable ASSPs).
There is no technology play in the case of Canyon Bridge acquisition of Lattice—this is purely a financial play. The newly-formed Canyon Bridge wants to be a player in the technology market, and it sees Lattice Semiconductor as the anchor for their long-term investment portfolio, said Doug Hunter, senior director of marketing at Lattice Semiconductor in an interview with EE Times.
Canyon Bridge is going to leave the Lattice team in place while providing investment to accelerate what Lattice is already doing, Hunter said. This actually makes a lot of sense, because for Lattice has been carving out a nice niche (a large and growing niche) for itself over last few years with regard to small-to-medium capacity, low-power FPGAs deployed in a wide range of mobile, home and augmented/virtual reality market applications (in addition to FPGAs, Lattice also boasts its pASSP products and a suite of power and thermal management solutions).
In a regulatory filing, Lattice said that its sale to Canyon Bridge—expected to close in early 2017—is still subject to approval by U.S. national security watchdog Committee on Foreign Investment in the United States (CFIUS), which is known to be strict with semiconductor deals. The deal also needs to receive an antitrust approval in China.
Hunter said Lattice has been talking to shareholders and investors about its long-term vision, and that Canyon Bridge believes in this vision and wants to play a part in it.
But does Canyon Bridge know how to handle a high-tech company? Well, even though it's described as "a newly formed, global private equity buyout fund," the Canyon Bridge leadership team has deep roots in Silicon Valley. Collectively, the principals in Canyon Bridge have more than 50 years of experience in the global technology, private equity, and M&A markets from the perspectives of founders, senior management, board members, and equity investors.
In this day and age, where everyone is buying everyone else, Lattice was starting to look a little left out. Lattice's strategy of focusing on niche markets was good as far as it went, but niche markets simply aren’t going to cut it in the current business environment. Having serious investment from Canyon Bridge—coupled with the explosion in the IoT and cognitive (thinking, reasoning) systems boasting artificial neural networks and machine learning, vision and speech—may allow Lattice to evolve and grow its "niche" and become a major player.