Appetite for Acquisition: How Maxim Integrated Bought Its Way Into the NASDAQ Top 100

The History of Maxim Integrated

Maxim Integrated was established in 1983 in the San Francisco Bay Area, Silicon Valley, by IC industry experts Dave Fullagar, Jack Gifford, and Lee Evans.

Within the first ten years of its establishment, Maxim was already showing most of the trappings of a successful venture. The company turned its first profit within its first four years.

Maxim’s first acquisition was in 1989: a wafer fabrication facility. It would make another three acquisitions in the 1990s, including another wafer fabrication concern and a semiconductor division of a firm called Tektronix.

By 1993, Maxim reported that its revenues had passed $100 million.

An overview of Maxim’s milestones symbolizes a company that lived up to its “be bold” mantra. In 2005, the firm became a Fortune 1000 company.

Between 2007 and 2010, it announced another six acquisitions, which it describes as aimed at augmenting technical expertise and expanding product offerings.   

Revenues continued to scale, and by 2010 Maxim was reporting annual revenues of $2.2 billion, reaching $2.5 billion by 2018. In 2018, the company made it into the JUST Capital 100 list and the S&P 500.    

Below is a sample of some of the most exciting acquisitions Maxim made over the years. 

Maxim Buys Dallas Semiconductor “for a Song” 

Towards the end of 2001, reports started indicating Maxim was planning to purchase Dallas Semiconductor Corp for $2.5 billion.

Dallas Semiconductor was established in 1984. The company designed, manufactured, and distributed mixed-signal specialty conductors. It identified its major customers as firms in the business of “broadband telecommunications, wireless handsets, cellular base stations, secure Internet communications, networking, servers, [and] data storage.” 

Dallas Semiconductor publicized several milestones in the years it operated as an independent company. For instance, in 1997, it announced that it had produced the oscillator chip, which was the “first to offer a high degree of accuracy without an external reference.”

In 2000, Dallas Semiconductors announced that it supplied the internet components for a secure electronic voting system. The system was first used in a straw poll for the North Carolina Federation of Young Republicans in the same year.

The company’s financials show a profitable business for a few years before being acquired by Maxim. For instance, the firm’s net sales went up from $233.3 million in 1995 to $390 million in 1999. Gross profit grew from $115.7 million in 1995 to $201.5 million in 1999.

No succession plan 

An article published by the technology and consumer electronics news website Cnet.com reports that some analysts were stunned that the Dallas Semiconductor executives agreed to such a low price. The same article quotes an industry expert, Eric Boyce of Baldwin Anthony McIntyre (a Dallas-based financial services company). He said, “Maxim bought Dallas Semiconductor for a song.”

Some commentators credit the Dallas Semiconductor’s executives’ willingness to sell the business at a low price to the fact that it was the only choice they had after the company’s Chairman, Chief Executive, and President C.V. Prothro had died.

Boyce is quoted saying that Dallas Semiconductors “had a very strong and charismatic founder at the helm and when he passed away, it woke them up that they didn’t have a succession plan.”

Dallas Semiconductor brands were actively used until 2007.

The Acquisition of Vitesse Storage Products Division

In a short press release dated October 29, 2007, Maxim announced that it had completed the acquisition of Vitesse’s storage products business for $63 million.

Vitesse was established in 1984 by Al Joseph, with $30 million funding from the Norton Corporation. Initially, the company’s name was Vitesse Electronics Corporation. It changed to Vitesse Semiconductor in 1987. In 1991, it became a public company.

Vitesse was a chip manufacturer famous for manufacturing chips from gallium arsenide (GaAs) instead of silicon. The main advantage of using GaAs is that they increase transmissions to 10 Gb/s (gigabits per second), about six times faster than transmissions possible with silicon chips.

In 1999, Vitesse acquired Xaqti Corp for $65 million. Xaqti Corp manufactured semiconductors for the high-speed Gigabit Ethernet market. A year later, Vitesse acquired Orologic for an estimated $450 million and Sitera (a network processor startup) for $750 million.    

In the acquisition announcement, Maxim says that “an additional amount up to $12 million in cash will be payable by Maxim upon the achievement of certain commercial milestones through the end of Vitesse’s 2008 fiscal year on September 30, 2008.”

It doesn’t look like Vitesse executives always operated above board. A 2013 article in the Chicago Tribune reports that top executives at Vitesse had agreed on a settlement with the U.S. Securities and Exchange Commission. This followed accusations that the company had inflated its earnings in the past. 

Teridian: Expanding Presence in the Smart Meter Market

On April 12, 2010, Reuters reported that Maxim was making plans to acquire Teridian for $315 million.  The news agency stated that the aim of the acquisition was “to expand its presence in the smart meter market.”

Teridian was established as TDK Semiconductor Corp. In 2005, the company announced that it was changing its name to Teridian Semiconductor Corp with immediate effect. The name change took place after the acquisition of the company by a firm named Golden Gate Capital. 

Teridian described its core business as “developing metering ICs needed for the digital transition from standard meters to smart utility meters.” The firm claimed that, in about two decades, it had delivered more than 25 million units that had become famous for being cost-efficient, highly reliable, and easy to use.

Reuters cites Teridian executives who indicated that the acquisition deal would assist Maxim in accelerating “sales of its existing power management, real-time clock, and interface products, and security IP, which are all required in smart meters.”

In 2016, Maxim announced that it had sold its energy metering business to Silergy Corporation. Silergy is a Chinese manufacturer of high-performance analog integrated circuits.

Strengthening Market Position with Phyworks

Less than six months after acquiring Teridian, Maxim announced that it was paying $72.5 million to acquire Phyworks Ltd.

Phyworks was established in Bristol in the United Kingdom in 2000. The company developed and manufactured high-speed communication chips. Its main customers were firms in the business of cable communications, telecom, and storage systems.

The press release announcing the acquisition describes Phyworks as “a developer of high-speed communications chips designed to cut the cost of 10 Gbps significantly and below copper and optical interconnects.”  

Phywork’s revenues, two years before it was acquired by Maxim, were reported to be around $10 million a year. It’s most likely that this amount had scaled quite drastically by the time of the acquisition for Maxim to agree to pay $72.5 million.

A few months before the Maxim acquisition, Phyworks reported that it had shipped its 30 millionth chip. The company also said that it expected a 90% growth in 2010. These numbers likely raised Maxim’s appetite for the acquisition.  

In a press release announcing the acquisition, Maxim gives a glimpse of why it was making the acquisition. Doluca, the company’s CEO, is quoted saying, “Business and consumer appetite for access to information anywhere, anytime, will continue to grow exponentially.” He adds, “The backbone to support the increased data traffic is high-speed optical networks. Additionally, optical networks are now beginning to reach consumers directly with fiber to the home.”

Doluca also indicated that he saw the addition of Phyworks’ talent and product portfolio making Maxim stronger, allowing the company to capitalize on its growth.

SensorDynamics: Enabling a New Generation of Intelligent Machines

Maxim reported its acquisition of SensorDynamics, a company that developed and manufactured proprietary sensor and MEMS solutions, on July 18, 2011. The deal involved approximately $130 million, with the buyer agreeing to acquire around $34 million in debt. 

Doluca is quoted in a press release saying, “The result will be a unique combination of technologies that will eventually enable a whole new generation of intelligent machines.”

SensorDynamics was established in 2003 by Hubertus Christ, Herbert Gartner, Volker Kempe, and Jürgen Tittel. These three had worked together for many years before the company was officially established.

SensorDynamics was in the business of designing, manufacturing, and distributing semi-fabless semiconductors. It mainly focused on sensor solutions for high-volume applications in the automotive sector.  

In 2005, SensorDynamics was named as part of the Tornado100 list. The Tornado 100 list conveners say that the list represents “a critical selection of the 100 best-performing and innovative high-tech private companies of Europe and Israel in the past year.”

Genasic Is Now Part of Maxim 

Without much fuss, Maxim acquired an English company called Genasic Design Systems Ltd. A 2012 article announcing the acquisition cites the Genasic website, which announced, “Genasic is now part of Maxim Integrated Products.”

On its LinkedIn page, Genasic Design Systems Ltd described itself as a “Fabless IC company with a specific focus on designing RFICs for Mobile Communications Systems.” The privately held firm employed less than ten people. It was established in 2009.

Writing for Rethink Technology Research, an organization that calls itself “a thought leader in 5G, and all forms of wireless; the entertainment ecosystem and streaming media,” Peter White attempts to unpack the acquisition.

White says that “the acquisition takes Maxim, a major in the lower reaches of the RF transceiver space, into higher-value sectors, now it has Genasic’s first commercial chip, a 65nm CMOS transceiver for HSPA and LTE, the GEN4100.”

Seeking Diversification with Volterra Semiconductor Corporation

Maxim’s acquisitions expedition continued in 2013 with the announcement that the company had successfully acquired Volterra Semiconductor Corporation.

According to a Forbes.com listing, Volterra was established in 1996 in Fremont, California. It was in the business of designing, manufacturing, and distributing mixed-signal and power management semiconductors. The company mainly served the storage, computing, networking, and consumer markets. 

The Forbes.com listing estimated Volterra’s assets at $203 million, its revenue at $166 million, and a profit of $25 million. This was before Maxim acquired the firm.  

A press release published by Maxim providing more details about the acquisition quotes Doluca. He says, “With Volterra, we will strengthen our position in the enterprise and communications markets.” 

Doluca is also quoted in the press release saying that the acquisition of Volterra would “add a very talented team and leading-edge proprietary technology in high-current power management solutions, which further diversifies our business model.”

The MercuryNews.com reported the acquisition as a “huge Silicon Valley merger.” Considering that the brand Volterra Semiconductor is no longer in the market, it’s most likely merged into Maxim.

The Final Acquisition

Maxim continued its acquisition frenzy in 2020. However, it would soon be time for the company to acquire itself.

In a July 13, 2020 article, Reuters reports that Analog Devices Inc. (ADI), a chipmaker, had announced that it was preparing to acquire Maxim for $21 billion. Reuters says that the deal aimed to boost ADI’s market share in automotive and 5G chip making.

A press release announcing the acquisition quotes ADI President and CEO Vincent Roche singing Maxim’s praises. He says, “Maxim is a respected signal processing and power management franchise with a proven technology portfolio and impressive history of empowering design innovation. Together, we are well-positioned to deliver the next wave of semiconductor growth while engineering a healthier, safer, and more sustainable future for all.”

The history of Maxim’s numerous acquisitions shows what the founders of the company meant when they said, “The biggest risk is not taking one.” They seem to have taken their fair share of risks.

After the merger with Analog Devices, Doluca is quoted in a press release saying, “I am excited for this next chapter as we continue to push the boundaries of what’s possible, together with ADI.” With a price tag of $21 billion, it’s easy to identify the source of the excitement.