Wipro Acquires A Semiconductor Engineering Specialist

/ October 15, 2020/ India, M&As (small under $50m in revenues), Semi-conductors, US, Wipro

Wipro Joins the Rest of the Industry and Acquires A Semiconductor Engineering Vendor

Wipro joined many competitors in acquiring a semiconductor engineering specialist. ER&D service vendors are rushing into this market, attracted by its long-term growth potential. Indeed, we estimate to ten the number of semi-conductor M&As since 2015. Altran, through the Aricent, GlobalEdge, and SciConTech transactions, has been the most acquisitive. However, all the industry’s brand names have been active, e.g., Tech Mahindra, HCL Tech, Alten, LTTS, and Cyient.

Wipro is acquiring Eximius Design, an Indian-centric San Jose-headquartered firm. Eximius had 2019 revenues of USD 35m and a headcount of 1,100. Wipro is paying USD 80m in cash, suggesting that Eximius is high growth and has a double-digit margin.

Wipro’s acquisition of Eximius is a surprise to us. To the best of our knowledge, Wipro expanded its capabilities toward semiconductor engineering more than a decade ago. It took over notably two firms, (Saraware and NewLogic, in 2005-06.

The Semi-Conductor Industry Is Going Through Disruption

The timing of the transaction seems a bit odd. Currently, the state of the semiconductor industry is uncertain. First, the Trump administration continues its trade war with China, blocking US manufacturers to sell to Huawei. Secondly, the industry is going through a client change from hardware and mobile device manufacturers to connected devices and automotive vendors. Finally, manufacturing semiconductors requires a lot of investment and is driving the consolidation of the industry. And, in the past six months, two mega-deals have occurred: NVIDIA with ARM for USD 40bn and ADI with MXIM for USD 21bn. Also, stock markets are speculating about a USD 30bn take-over by AMD of Xilinx.

In other words, we are guessing that the next few months will not necessarily be easy for ER&D vendors. However, long-term, the semiconductor industry is indeed an attractive industry for ER&D vendors. We are guessing that Wipro has taken a long-term view of this industry.

We have compiled a list of semiconductor engineering M&As here.

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