Chip designer CSR rejects takeover bid from US rival Microchip Technology as it mulls IoT options

West Malling, Kent, UK. September 1, 2014 — CSR has confirmed that it has been approached by Microchip Technology Inc. with terms for a possible offer for the company. The proposal by US-based MicrochipTech, a larger rival as well as a customer, has been rejected by the CSR Board and the company said that it is “considering its options”.

CSR said: “The price proposed by Microchip has been rejected and the Board is considering its options for the company. This statement is being made by CSR without prior agreement or approval of Microchip. There can be no certainty that an offer will be made nor as to the terms on which any offer might be made.”

The company went on to say, “JP Morgan has been appointed to look at a number of bids for CSR; an offer from Microchip has been rejected; and that under legal requirements Microchip has until September 25th to either make a revised offer or announce that it is no longer interested.”

CSR is the UK’s second largest chip designer after ARM, writes Jeremy Cowan, and has been known for its dominance of the Bluetooth chip market, as well as providing semiconductors for mobile devices and satellite navigation. It supplies chips for Apple’s Beats brand headphones. But the company’s share price and valuation have proved volatile in recent years as some key clients notably Nokia have lost market share. The bid prics has not been disclosed but analysts at NSBO quoted in the Financial Times estimated CSR’s value at US$2.7 billion.

Arizona-based Microchip Technology produces memory, wireless and processor microchips. One of the appeals of CSR for the company — and for other US-based enterprises — is the prospect of “tax inversion”, a means for American companies to use non-US earnings without paying US taxes on them. The bid news has now sparked speculation that technology giants such as Texas Instruments Inc. (NASDAQ:TXN) and Broadcom Corp (NASDAQ: BRCM) could enter the bidding.

CSR has recently increased its focus on designing chips for the Internet of Things (IoT), and believes that its experience makes it well placed to capitalise on any forthcoming surge in wearable technology-related business. (See also: Analysts find wearable tech market is held back by poor business models and need for fashion collaboration).

Following the announcement, Paul Beastall at Cambridge Consultants said: “It is likely that most (IoT) devices will use a local ‘hub’ to connect a range of devices associated with a person, car or building back to the internet. This may not be the most cost-effective approach in the long term but it is certainly the lowest risk with incremental investment on proven and established networks. For personal applications, the smartphone is the obvious candidate for a hub device since it already includes data connectivity over the mobile network, local connectivity options via WiFi or Bluetooth, and a user interface for presentation and configuration.

“Is Microchip’s offer for CSR based on the same thinking? CSR has key expertise in connecting to the Bluetooth Low Energy wireless standards deployed in smartphones that can be used to act as a personal hub, rather than a building-centric one and is also very active in wireless home entertainment technology. It is also targeting solutions to be factory installed by vehicle manufacturers, delivering connectivity straight from when the car is driven out of the showroom,” Beastall added. “We are already seeing health and fitness monitoring equipment that communicates with the internet via smartphones, leading the way for wearables. These products are moving from simple activity trackers to smartwatches that can also be used as an extension of the smartphone and connected glucose monitors for monitoring and tracking blood sugar levels.”

 

ARMed and ready

Meanwhile, as we reported in June, Cambridge UK-based ARM® and Sensor Platforms Inc. are extending their collaboration to the Open Sensor Platform (OSP) to simplify development of embedded sensor-based products utilising ARM architecture. Contributions to the OSP framework will enable ARM CMSIS, the ARM RTX RTOS, and compatibility with the ARM mbed™ SDK and mbed platforms.

OSP provides a framework for the deployment of sensor fusion hubs for ARM-based solutions in mobile computing, wearables and IoT devices. This reportedly allows developers to rapidly create intelligent products enabled by standards-based software and hardware which are easy for developers to deploy and manage.