What's going on?
Renesas sure had a lot to say for itself on Monday: the Japanese chipmaker announced it was buying British chipmaker Dialog.
What does this mean?
Mergers and acquisitions were all the rage among chipmakers in 2020, doubling in number from the year before. And it looks like Renesas wanted in on the dealmaking: the company’s now broadening its focus beyond chips for cars and picking up one of Apple’s main suppliers.
Investors did seem nervous about the move, mind you: Renesas’s share price dropped 4% on the news, and there could be a couple of reasons why. For one thing, this is its third major deal in four years, and investors could be worried it’s taking on too much debt. And for another, mergers usually help the buyer save money by cutting duplicate costs. But considering there’s not much overlap between the two chipmakers’ business models, that’s not likely to happen here…
Why should I care?
The bigger picture: It’s a good day to buy hard.
Dealmaking came back with a vengeance in the second half of last year, and it’s not done yet: the overall value of acquisitions so far this year is 150% higher than it was at the same point in 2020. That’s at least partly down to (what else?) the pandemic: research suggests the strongest-performing companies make twice as many deals during economic downturns as their rivals, just by picking up the businesses other firms are selling to survive.
Zooming out: Tesla’s now accepting bitcoin.
Chipmakers have been benefiting from the surging demand for electric vehicles too. And they’re not alone: Tesla said on Monday that it had invested in bitcoin and that it’ll start accepting the cryptocurrency as payment for its cars. That got investors thinking about the possibility other companies will follow Tesla’s lead, and they sent bitcoin’s price soaring.