To reduce reliance on Apple, its largest customer, Dialog's latest acquisition will help it expand into the growing industrial IoT market.
Dialog Semiconductor last week made its third Internet of things (IoT) acquisition in 12 months by announcing its intention to acquire Adesto Technologies for $500 million in cash.
As part of its quest to reduce reliance on Apple, Dialog said the acquisition of Adesto will strengthen its industrial portfolio and will help accelerate expansion into the growing industrial IoT (IIoT) market that enables smart buildings and industrial automation (Industry 4.0). Headquartered in Santa Clara, California, Adesto has approximately 270 employees and a portfolio of industrial solutions for smart building automation that would complement Dialog’s manufacturing automation products. Adesto’s solutions are sold across the industrial, consumer, medical and communications markets.
Dialog CEO Jalal Bagherli said, “This acquisition substantially enhances our position in the industrial IoT market,” and added that the Adesto portfolio will complement the product line from Creative Chips, one of the companies Dialog acquired last year.
We asked Dialog how its IoT strategy is progressing and how Adesto will operate within Dialog. The company’s senior vice president of corporate development and strategy, Mark Tyndall, told EE Times, “Our efforts are progressing very well, especially around IoT applications requiring BLE and Wi-Fi connectivity as we build upon our prior acquisitions of Creative Chips and FCI. With Adesto, we will be able to offer customers even higher performance solutions. To put it into perspective, we estimate that this year, we will ship 100 million units of our PMIC, Bluetooth low energy and audio ICs alongside Adesto’s specialty low-power memory products into common applications such as hearables, wearables, tags and proximity sensors.”
On the integration of Adesto, he commented, “It’s too early to announce any definitive integration details at this time, as this announcement is the first step. That said, we are excited to be adding such highly skilled and complementary design and engineering capacity to service the large demand driven by Industry 4.0.”
Tyndall added, “We expect approximately $20 million in cost synergies within the first calendar year of close across the combined company from supply change efficiency improvements and other typical public company savings. In addition, we expect considerable revenue synergies. For example, we plan to drive revenue synergies by cross-selling Adesto’s cloud connectivity offering in building automation into Dialog’s offering in factory automation.”
The deal, expected to close at the end of the third quarter of 2020, will provide Dialog with access to over 5,000 new customers in industrial connectivity, smart metering and building automation. The complementary offerings from the two companies will enable full system solutions for wearables, hearables, and other IoT applications by combining Adesto’s low-power specialty memory products with Dialog’s BLE & Wi-Fi connectivity and true wireless stereo (TWS) audio ICs. Dialog said it will also unlock future growth in the automotive market, by qualifying Adesto’s specialty memory products using Dialog’s established automotive production and test flow.