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Analog Devices is buying Maxim Integrated for $21 billion in a big bet on car chips

A look at the deal in two charts.

Chips

The automotive market appears to be a particular driver of this deal.

Photo: Eric Cheung

Analog Devices announced Monday that it's acquiring competitor Maxim Integrated for $21 billion, the biggest U.S. merger announced so far this year.

Both Analog and Maxim make analog semiconductors: chips that take real-world inputs — like sound, light and pressure — and turn them into digital signals that a computer can use. Increased demand for smarter infrastructure and devices, from factories to cars, is driving demand for those chips.

The automotive market appears to be a particular driver of this deal. Maxim is strong in the segment, where it makes popular power management systems. On a call with investors, Analog CEO Vincent Roche confessed that this is a market where Analog has underperformed. Buying Maxim is an easy way to fix that, at the same time as diversifying Analog's industrial-heavy revenue mix.

The two companies also have complementary regional profiles. While Analog is heavily reliant on Western markets, Maxim derives the vast majority of its revenue from Asia, and particularly China. With the Asian market constantly growing in importance, Maxim's customer relationships there could help Analog increase sales for its products in the region, too.

As is often the case with big deals like this, Analog claims it can achieve $275 million worth of cost synergies within two years of the transaction closing, driven by manufacturing efficiencies and lower sales costs. But this doesn't seem like a purely financial deal. Roche highlighted how tough the competition for hardware talent is right now, with engineers increasingly choosing to go into software instead. By taking a competitor out of the market, Analog hopes that it will be easier to attract top talent.

Martin Cooper with his original DynaTAC cell phone.

Photo: Ted Soqui/Getty Images

Martin Cooper helped invent one of the most consequential and successful products in history: the cell phone. And almost five decades after he made the first public cell phone call, on a 2-pound brick of a device called the DynaTAC, he's written a book about his career called "Cutting the Cord: The Cell Phone Has Transformed Humanity." In it he tells the story of the cell phone's invention, and looks at how it has changed the world and will continue to do so.

Cooper came on the Source Code Podcast to talk about his time at Motorola, the process of designing the first-ever cell phone, whether today's tech giants are monopolies and why he's bullish on the future of AI.

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David Pierce

David Pierce ( @pierce) is Protocol's editor at large. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

People

How the pandemic has changed tech business travel to China

In 2020, visiting China for business can be a bit like playing the lottery.

After concluding his 14 days in isolation, startup adviser Kevin Yang was free to continue his business trip.

Photo: Kevin Yang

Kevin Yang has traveled to China countless times. As a former Huawei and Oppo executive, he used to visit the country almost every quarter. However, when Yang recently got ready to visit a Chinese startup he is advising, he quickly realized that the pandemic would make this a very different trip.

Yang has been documenting his trip in a series of LinkedIn posts, which offer some fascinating insights into the state of business travel during COVID, the ever-growing importance of WeChat in a country recovering from the pandemic, and shifts in the Chinese tech industry as it adapts to a rapidly changing world.

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Janko Roettgers

Janko Roettgers (@jank0) is a senior reporter at Protocol, reporting on the shifting power dynamics between tech, media, and entertainment, including the impact of new technologies. Previously, Janko was Variety's first-ever technology writer in San Francisco, where he covered big tech and emerging technologies. He has reported for Gigaom, Frankfurter Rundschau, Berliner Zeitung, and ORF, among others. He has written three books on consumer cord-cutting and online music and co-edited an anthology on internet subcultures. He lives with his family in Oakland.

Protocol | Enterprise

VMware CEO Pat Gelsinger on Kubernetes hype and freeing your CPUs

Kubernetes is an important part of VMware's product strategy, but even its CEO thinks some backers are a little too enthusiastic. Plus, why Google's open-source approach will "backfire," and the long-term impact of chip changes in the data center.

VMware CEO Pat Gelsinger says we're in a Kubernetes hype cycle.

Photo: VMware

VMware CEO Pat Gelsinger has worked for two organizations over a 40-year career in technology and somehow managed to be at the center of the action the entire time.

Gelsinger still keeps a framed mockup of Intel's ground-breaking 486 PC processor in his office. It's a memory of one of his primary accomplishments as chief architect for Intel in the late 1980s, at a time when the PC was just starting to break through as the dominant computing platform. Three decades later, the world is driven by lightweight mobile devices and massive data centers that take on much of the heavy lifting, and he's been heavily involved in trying to help enterprise companies orchestrate that transition.

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Tom Krazit

Tom Krazit ( @tomkrazit) is a senior reporter at Protocol, covering cloud computing and enterprise technology out of the Pacific Northwest. He has written and edited stories about the technology industry for almost two decades for publications such as IDG, CNET, paidContent, and GeekWire. He served as executive editor of Gigaom and Structure, and most recently produced a leading cloud computing newsletter called Mostly Cloudy.

Power

The Nvidia-Arm deal hasn't boosted RISC-V. But it soon could.

RISC-V International CEO Calista Redmond tells Protocol that the organization's open-source technology should have its iPhone moment in the next couple of years.

SiFive's HiFive1 development board contain a microcontroller based on RISC-V's chip architecture, one of a growing number of applications making use of the RISC-V open-source technology.

Photo: Gareth Halfacree/Flickr

When the umpire chooses a team, maybe it's time to look for a new umpire.

After Nvidia announced last week its plans to acquire Arm, the chip industry was turned upside down. Most large chip companies — save for Intel — license Arm's chip architecture in order to build their own hardware. Arm co-founder Hermann Hauser has an explanation for the company's runaway success: neutrality. Arm doesn't make its own chips, so it doesn't compete with its customers.

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Shakeel Hashim

Shakeel Hashim ( @shakeelhashim) is a growth manager at Protocol, based in London. He was previously an analyst at Finimize covering business and economics, and a digital journalist at News UK. His writing has appeared in The Economist and its book, Uncommon Knowledge.

Power

Nvidia's $40B bet on AI, edge computing and the data center of the future

With its purchase of chip designer Arm, Nvidia hopes to build on its recent success selling machine-learning chips for data centers and define the next decade of enterprise computing.

"These types of computing platforms are going to start changing in shapes and sizes, although the architecture is going to be very similar," says Nvidia CEO Jensen Huang.

Photo: Patrick T. Fallon/Bloomberg via Getty Images

Nvidia's landmark purchase of chip design stalwart Arm will have an immediate impact on the mobile market, but the long-term payoff from the deal is likely to come from the enterprise.

The $40 billion deal, coming just four years after Softbank Group's 2016 acquisition of the U.K. chip designer, sets the stage for Nvidia's growing ambitions in enterprise computing. Nvidia rose to prominence building graphics chips for powerful gaming PCs, but in recent years has ridden a wave of interest in data center chips that can tackle complex machine learning algorithms to new heights.

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Tom Krazit

Tom Krazit ( @tomkrazit) is a senior reporter at Protocol, covering cloud computing and enterprise technology out of the Pacific Northwest. He has written and edited stories about the technology industry for almost two decades for publications such as IDG, CNET, paidContent, and GeekWire. He served as executive editor of Gigaom and Structure, and most recently produced a leading cloud computing newsletter called Mostly Cloudy.

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