In a move to expand its product portfolio and market position and a departure from its long RF history, Qorvo plans to acquire Active-Semi International, a private fabless supplier of programmable analog power solutions. Formed in 2004, Active Semi supplies mixed-signal ICs for power management and motor control applications, including power tools, garden tools, refrigerators and other appliances.
Qorvo did not disclose the purchase price; however, it did say the acquisition is expected to be accretive to non-GAAP gross margin and non-GAAP EPS in the first year. The acquisition requires regulatory approval and is expected to close during Qorvo’s current fiscal quarter, which ends June 29. The Active-Semi business will become part of Qorvo’s Infrastructure and Defense Products (IDP) group, led by James Klein.
In a press release announcing the proposed acquisition, Qorvo said Active-Semi’s technologies align with the need for efficient power in multiple markets, such as 5G, data center, industrial, automotive and the smart home. Some of those applications overlap the RF presence of Qorvo’s IDP business: base stations, active phased arrays for defense, automotive and the IoT. According to Qorvo, Active-Semi’s programmable mixed signal power solutions “provide customers with compelling simplicity, efficiency and design flexibility — resulting in smaller footprints, lower bill of material costs and reduced time to market.”
As a private company, Active-Semi does not release revenue; however, a corporate presentation on the company’s website says it has grown revenue 3x between 2015 and 2018, shipping 1.5 billion ICs.
Active-Semi’s management team is cut from TI cloth: Larry Blackledge, CEO; David Briggs, VP and GM of product lines; Wayne Chen, VP of R&D and operations; and Dee Hunter, VP of human resources all spent 20 or more years at TI.
Leaving Its RF Roots
Qorvo’s move stepping out of pure RF follows a similar path taken by Skyworks, which acquired Advanced Analogic Technologies in 2011. Advanced Analogic added battery chargers, DC/DC converters, voltage regulators and LED drivers to Skyworks’ portfolio, expanding content opportunities in the platforms where Skyworks had an RF position, as well as adding new vertical markets.
While RF front-ends for mobile generate most of Qorvo’s revenue — 72 percent in the December 2018 quarter — that market is highly dynamic and competitive. Apple, Qorvo’s largest customer, is challenged by softness in consumer demand for iPhones and is shifting its strategy to emphasize service revenue built on the company’s hardware platforms.
Qorvo is pursuing a strategy to reduce its dependence on mobile through its IDP business, setting double-digit growth goals for the business through organic and M&A initiatives. Organically, IDP has been successful capturing opportunities for GaN in defense and wireless infrastructure, non-GaN products in wireless infrastructure and silicon and GaAs components for IoT and Wi-Fi. Qorvo’s IoT portfolio was strengthened through the acquisition of GreenPeak Technologies in 2016.
The Active-Semi acquisition reveals the opportunity — perhaps the need — for Qorvo to go beyond its RF roots to achieve its growth and profitability objectives, while reducing its dependence on smartphones and Apple. Qorvo said the deal will add $3 billion to its addressable market.
“With the acquisition of Active-Semi, Qorvo will expand IDP’s product offerings for existing customers and extend our reach into new high-growth power management markets. We see significant opportunities to accelerate adoption of Active-Semi’s innovative analog/mixed signal solutions across multiple markets by leveraging Qorvo’s global scale, sales channel and customer relationships.” — Bob Bruggeworth, president and chief executive officer of Qorvo
“The combination of Active-Semi’s programmable analog power solutions with Qorvo’s leading product and technology portfolio opens up vast opportunities to accelerate revenue, develop more highly integrated system solutions and target new high-growth markets, like 5G infrastructure.” — Larry Blackledge, CEO of Active-Semi