8 Chipmakers That Could Be Bought Next Now that Intel Is Acquiring Mobileye

The semiconductor industry was hit by a major wave of consolidation in 2016 as chipmakers struck deals both large and small, with acquisitions totaling more than $98 billion last year. 

Intel's (INTC - Get Report) $15.3 billion purchase of Mobileye (MBLY) serves as just one of many indicators that last year's flurry of consolidation will likely continue this year. The deal also shows that more and more chip companies are diversifying beyond the legacy PC business and toward the rapidly developing autonomous car market -- an area where semiconductors have become a vital commodity in automakers' efforts to develop such technologies. 

"The automotive industry and the tech industry are converging at a rapid pace," said Needham analyst Rajvindra Gill. "So you have auto companies like  General Motors  (GM - Get Report) who are buying technology assets to support autonomous driving and, at the same time, you have semiconductor companies that have the hardware and processors but are buying software companies to become the primary channel for automakers." 

Self-driving cars use mapping, machine-learning and computer vision technologies, among others, that require high-level processing chips, making chipmakers all that more ripe for acquisition.  

Here are eight semiconductor companies that might get acquired next in the race to develop self-driving cars:

1. Xilinx (XLNX)
1. Xilinx (XLNX)

Revenue in 2016: $2.21 billion

Market Cap: $14.9 billion

Xilinx  (XLNX - Get Report) is a San Jose, CA-based technology company that is widely known for manufacturing programmable logic chips, or field-programmable gate arrays (FPGAs) used in data centers, industrial facilities and automobiles. The company's exposure to automotive, communication and artificial intelligence markets position it to be an attractive takeover target, according to Mizuho analyst Vijay Rakesh. Currently, Xilinx faces very little competition in the FPGA market, with Intel being its primary threat.

2. Cypress Semiconductor (CY)
2. Cypress Semiconductor (CY)

Revenue in 2016: $1.92 billion

Market Cap: $4.5 billion

San Jose, CA-based Cypress  (CY - Get Report) designs and manufacturers semiconductors, specializing in NAND flash memory devices. Companies developing connected cars will have to focus on power management as they require more and more complex components in order to function, Needham analyst Rajvindra Gill said. For that reason, Cypress' low power flash memory products will be highly sought after, making it a prime acquisition target. 

3. Nvidia (NVDA)
3. Nvidia (NVDA)

Revenue in 2016: $6.9 billion

Market Cap: $60 billion

With one of the heftiest valuations the chip sector, Santa Clara, CA-based Nvidia (NVDA - Get Report) is probably too large to be acquired. But that hasn't stopped analysts from speculating that a deal could occur. Nvidia manufactures graphics processing units that are widely used in self-driving cars being developed by Tesla (TSLA - Get Report) . Nvidia's also partnering with Bosch to create an AI-enabled computer for mass-production in autonomous vehicles. The company's high-level chips, made specially for AI and machine learning, could make it an attractive target for Apple (AAPL - Get Report) or Alphabet (GOOGL - Get Report) as both of them dive into the driverless car market, said Ross Gerber, CEO of wealth and investment management fund Gerber Kawasaki.

4. ON Semiconductors (ON)
4. ON Semiconductors (ON)

Revenue in 2016: $3.9 billion

Market Cap: $6.3 billion

Phoenix-based ON Semiconductors (ON - Get Report) manufactures a variety of semiconductor components, including sensors, power management and connectivity products. ON has developed into a leading manufacturer of camera-based image sensors which are heavily employed in self-driving cars and are essential in lidar systems, Gill said. The company also manufactures LED lighting products used in advanced driver assistance systems. ON's expertise in these markets make it very likely to be snapped up soon, Gill added. 

5. Tower Semiconductors (TSEM)
5. Tower Semiconductors (TSEM)

Revenue in 2016: $4.8 billion

Market Cap: $2.2 billion

Israel-based Tower Semiconductors (TSEM - Get Report) manufactures integrated circuits used in things like PCs, industrial and automotive products. Needham's Gill said Tower manufactures many of the sensors and "high performance" semiconductor foundries used in the lidar systems integrated into self-driving cars. Lidar technology involves laser sensors that allow cars to monitor and navigate their environments. Tower itself could also be looking to make more bolt-on acquisitions in the near term, Gill added. 

6. STMicroelectronics (STM)
6. STMicroelectronics (STM)

Revenue in 2016: $6.5 billion

Market Cap: $14 billion

Based in Switzerland, STMicroelectronics (STM - Get Report) designs, develops and manufactures semiconductor circuits and devices. The company is working with Tesla to provide components used in its Tesla Model S, according to research firm IHS Markit, and has also partnered with Mobileye to develop chips for self-driving cars.

7. Ambarella (AMBA)
7. Ambarella (AMBA)

Revenue in 2016: $310 million

Market Cap: $1.8 Billion

Ambarella (AMBA - Get Report)  produces semiconductor processing solutions for video that enable HD display. The Santa Clara, CA-based company doesn't currently manufacture a system-on-a-chip for autonomous vehicles, but has indicated that it plans to move into the autonomous driving space. In 2015, Ambarella acquired Italy-based VisLab, a privately-held company that develops computer vision technologies used in autonomous vehicles. So while its exposure to self-driving car markets is limited, the company's computer vision offerings could be a boon for original equipment manufacturers like GM and Ford (F - Get Report) , among others. 

8. Maxim Integrated (MXIM)
8. Maxim Integrated (MXIM)

Revenue in 2016: $2.2 billion

Market Cap: $12.9 billion

San Jose, CA-based Maxim Integrated (MXIM - Get Report) designs, manufactures and sells analog and mixed-signal integrated circuits. Maxim's semiconductor chips are widely used in infotainment systems, electric-car battery management and communications chips for vehicle video cameras. Rival chipmakers Texas Instruments (TXN - Get Report) and Analog Devices (ADI - Get Report) tried to buy Maxim in 2015, but later abandoned those efforts. However, Maxim could resurface as a possible takeover target this year. 

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