NEW YORK ( TheStreet) -- Texas Instruments ( TXN - Get Report) had to grab something as it fell out the mobile market, and industrial chip giant National Semi ( NSM) was ready and willing. In the wake of the $6.5 billion deal, the chip sector was sizzling Tuesday, but given the dynamics behind the TI move, a rush of more hot takeouts may not be on the menu.
Shares of outfits like Fairchild Semi ( FCS) and ON Semi ( ONNN) surged 3% and 5% Tuesday in the wake of TI's richly-valued, all-cash 78% premium price for chip laggard National Semi. The reaction is a wager that additional deals will follow in a chip sector consolidation trend. But the trend could end with TI and NatSemi, given TI's desperate predicament. Not only was TI skewered by the collapse of one of its biggest customers Nokia ( NOK - Get Report), but the mobile industry is shifting away from separate component vendors toward single-chip suppliers like Qualcomm ( QCOM - Get Report). Over the past decade, TI's fortunes soared as Nokia climbed to the top of the phone empire. But Nokia stumbled repeatedly in recent years, and in February, it junked its Symbian phone plan in favor of Microsoft's ( MSFT) Windows Phone 7 software. "Nokia's competitive challenges in the smartphone market will likely accelerate the decline in TI's wireless business," BMO analyst Ambrish Srivastava wrote in a research note Tuesday. But beyond Nokia's tailspin, TI had been closing down its so-called baseband business, the radio chips used to connect phones to networks. "Ti is exiting the baseband business and getting squeezed out of the processor market in mobile," said Rodman Renshaw analyst Ashok Kumar. TI has a solid processor chip business, but without a complementary baseband component, it is increasingly forced to compete against other shops like Qualcomm, which offers the complete solution on one chip. The writing may have been on the wall when Nokia picked Windows, an operating system that has been paired almost exclusively with Qualcomm's Snapdragon chips. --Written by Scott Moritz in New York.>To contact this writer, click here: Scott Moritz, or email: firstname.lastname@example.org.To follow Scott on Twitter, go to http://twitter.com/MoritzDispatch.>To send a tip, email: email@example.com.
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