Skyworks is buying PMC Sierra for $2 billion in Cash

PMC-Sierra, a provider of data center chips, will soon be part of the radio components manufacturer Skyworks after signing a $2billion purchase agreement.

Notwithstanding the fact that this deal might sound strange to many, the decision occurred as a simple product expansion and a chance to widen the buying scale for Skyworks.

Despite the need of a more consolidated market inside the semiconductor industry, which lead Avago to buy Broadcom for a $37 billion deal, for example; many other agreements are generated in the aim of creating new products for rising business opportunities. As David Aldrich, Skywork’s CEO, recently stated during a conference, the deal has been strategically made to help the company enter in new markets. In particular, Skyworks believes in the future need of networking gear and storage chips that companies, creating hyper scale data in cloud systems centres, will use. Not only PMC could carry out a strategic role for this purpose but this agreement will also help to diversify Skyworks’ portfolio.

Indeed, even if Skyworks is the official supplier of radio components used inside the latest iPhones, the company can’t consider itself off the hook since everything could change from one moment to another as soon as a new model gets planned. Having said this, it is important not to forget about the strong competition arriving from giants like Qualcomm, Avago and others that are pushing to consolidate components in smaller silicon packages.