Here’s a sampling: Fairchild Semiconductor is up nearly 5 percent in after-market trading. Analog Devices is up a little more than 4 percent. Maxim Integrated Products, 5 percent. Linear Technology about 3 percent. On Semiconductor more than 5 percent. Intersil, 8 percent. STMicroelectronics, 3 percent. You get the idea: Investors are clearly hoping that another acquisition is soon to happen in the world of analog semiconductors.

TI was already the big gorilla in the analog business. It’s a $42 billion business and TI accounted for about $6 billion worth of analog sales in 2010, and the analog business amounted to 43 percent of TI’s business last year. With this acquisition it goes from being a chip company that supplies the microprocessors for most of the world’s wireless phones to a mostly analog company. A Gartner market ranking of analog chip makers ranked TI number one and National fourth. The combination makes TI an even bigger gorilla yet.

Who’s number 2? Analog Devices, ahead of Maxim and Linear Technology, who are numbers three and five respectively in the Gartner rankings. Further down the list you see names like STMicro, On Semi, Intersil and Fairchild.

So what’s so great about analog chips? They go into everything: From wireless phones to games to medical devices to military and industrial gear. They manage power; help convert light and sound into digital information; and measure temperature or pressure or any other quantity that occurs in the real world. And with all the digital gadgets we rely upon these days, we’re relying increasingly on analog chips of every stripe. Analog sales grew 37 percent last year, which was faster than the chip business as a whole, Gartner analyst Steve Ohr told me.

As is the case with TI and National, there’s bound to be a lot of overlap in products and customers among all these other companies. That suggests that more combinations are likely, though with valuations inflating on the speculation, any company thinking of making an acquisition would probably want to sit tight until the prices come down a little bit before making a move.

In a company statement announcing the deal, TI CEO Rich Templeton described the deal as being about “strength and growth.” He said National had done a good job boosting its profitability and reining in expenses, and that the combination will, upon the close, boost TI’s earnings per share.

TI specializes in wireless chips sold into mobile phones while National specializes in analog chips. TI is in the analog chip business too and has 30,000 analog products in its portfolio, which will now be supplemented by the 12,000 analog products that National sells. In one go, analog products will become more than 50 percent of TI’s business.

Another key factor: National’s manufacturing prowess. It owns chip factories–usually referred to as “fabs”–in Maine, Scotland and Malayasia, and TI says it will continue to operate them.

Terms of the agreement call for National shareholders to receive $25 in cash for each share of National common stock they hold at the time of closing. TI expects to fund the transaction with a combination of existing cash balances and debt. As of December 31, TI had about $3 billion in combined cash and short-term investments, and no long-term debt. TI also had access to a variable-rate revolving credit facility that gives it access to a combined $1.9 billion until August 2012; I’m presuming that the remaining $1.5 billion or so will be borrowed. National also has $879 million and change in cash on its books, but a little more than a $1 billion in long-term debt.

Investors seem cautiously optimistic about the deal. TI shares are up slightly in after-hours trading. National shares are naturally soaring by 70 percent to catch up with the valuation of the deal. One other company whose price I just checked is that of Fairchild Semiconductor. It’s a rival to National in the analog and power-management business. Its shares are up 94 cents–or more than 5 percent–after hours, and there’s no mistaking the speculative hope that it could be the next takeover target.

Halla, 63, said Friday he will give up the CEO title at the chip maker on Nov. 30 to Donald Macleod, a 61-year-old Scot who has been at National since 1978 and was serving as president and chief operating officer. Halla said the appointment is fitting in view of Macleod’s contributions over the years at the company, which turns 50 this year. National is “the house that Donnie built,” Halla said.

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“While it’s horrible that people are out of jobs, I think it’s good for the nation long term; I think it’s good for this industry, the semiconductor industry; I think it’s good for the valley.”

– National Semi CEO Brian Halla, March 8, 2009

To see just how badly the continuing erosion of consumer confidence is affecting the chip industry, one need only look at the pitiable state of National Semiconductor (NSM). After announcing third-quarter revenues that were down
31 percent from the previous quarter and 36 percent from the same period a year earlier, the company said today it would sack more than a quarter of its workforce. In the months ahead, National Semi will close two facilities and eliminate 1,725 jobs.

A brutal cut–so brutal, in fact, that you’d think it might compromise the company’s ability to properly service its market. Yet with current quarter sales expected to fall five to ten percent sequentially, CEO Brian Halla says it’s a necessity. “The worldwide recession has impacted National’s business as demand has fallen considerably,” said Halla. “The actions we announced today will help us remain competitive.”

And don’t forget, they’re good for the nation and for the industry… long term. For those affected by them, not so much.

“While it’s horrible that people are out of jobs, I think it’s good for the nation long term; I think it’s good for this industry, the semiconductor industry; I think it’s good for the valley.”

– National Semi CEO Brian Halla, March 8, 2009

To see just how badly the continuing erosion of consumer confidence is affecting the chip industry, one need only look at the pitiable state of National Semiconductor (NSM). After announcing third-quarter revenues that were down
31 percent from the previous quarter and 36 percent from the same period a year earlier, the company said today it would sack more than a quarter of its workforce. In the months ahead, National Semi will close two facilities and eliminate 1,725 jobs.

A brutal cut–so brutal, in fact, that you’d think it might compromise the company’s ability to properly service its market. Yet with current quarter sales expected to fall five to ten percent sequentially, CEO Brian Halla says it’s a necessity. “The worldwide recession has impacted National’s business as demand has fallen considerably,” said Halla. “The actions we announced today will help us remain competitive.”

And don’t forget, they’re good for the nation and for the industry… long term. For those affected by them, not so much.

His notion is that the recent layoff spree in the Valley will slow down; but that companies trying to hold on to their talent while awaiting a recovery will shift to a four-day work week instead. Save money, but keep your talent. At least that’s the theory.

Chowdhry contends that National Semiconductor (NSM) will adopt a four-day work week for all of 2009, and that Cisco Systems (CSCO) is considering the same idea. He says his contacts believe almost every Silicon Valley company could adopt the idea, including Oracle (ORCL).

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Fairchild (FCS) reduced its guidance as well. It had been expecting $338 million to $360 million in sales for its fiscal fourth quarter. Now it expects just $320 million.

Fairchild is the latest semiconductor company to temper its estimates as demand for the computers and telecommunications gear in which its chips are used contracts. Earlier this week, Texas Instruments (TXN), National Semi (NSM) and Broadcom (BRCM) all cut their projections because of lousy market conditions.

Fairchild (FCS) reduced its guidance as well. It had been expecting $338 million to $360 million in sales for its fiscal fourth quarter. Now it expects just $320 million.

Fairchild is the latest semiconductor company to temper its estimates as demand for the computers and telecommunications gear in which its chips are used contracts. Earlier this week, Texas Instruments (TXN), National Semi (NSM) and Broadcom (BRCM) all cut their projections because of lousy market conditions.

Stupefying.

The year-end total for tech sector job losses in 2008 is expected to reach 180,000, according to Challenger, Gray & Christmas. That’s the largest annual job loss for the sector since 2003, when tech firms sacked some 228,325 employees.

Not at all hard to believe given the news these days. Job cuts through Oct. 31 total 140,422, according to Challenger’s calculations.

That is 31 percent more than the 107,295 cuts announced in all of 2007.

Looks like the tech sector is shooting for a full percentage point increase in unemployment this year.

“In addition to Sun Microsystems’ announcement, Applied Materials and National Semiconductor have announced job cuts in November,” says John Challenger, chief executive officer of Challenger, Gray and Christmas. “By the end of the year, we may also see cuts from Cisco Systems, Qualcomm and Nokia, all of whom are reporting falling sales amid the weakening economy.”

Wonderful. Something to look forward to…sigh….

Challenger’s release in full, after the jump.

Tech Sector Cuts To Reach Highest Level Since 2005
MORE THAN 140,000 TECHNOLOGY CUTS SO FAR

CHICAGO – After a quiet first half of the year, job cuts in the technology sector surged in the third quarter and are on track to reach the highest year-end total since 2003. The latest evidence that the economic downturn has reached the tech sector came this morning with the report that Sun Microsystems will be eliminating 5,000 to 6,000 jobs in a broad restructuring.

Through October 31, job cuts by firms in the telecommunications, electronics and computer industries total 140,422, according to global outplacement consultancy Challenger, Gray & Christmas, Inc., which tracks job-cut announcements daily. That is 31 percent more than the 107,295 tech-sector job cuts announced in all of 2007.

Nearly two-thirds of these job cuts (89,433) have occurred since July. The 69,654 tech-sector job cuts announced in the third quarter were 37 percent more than the 50,989 job cuts announced by technology firms in the entire first half of 2008. The third-quarter total was, in fact, the largest quarterly figure since the fourth quarter of 2003, when technology cuts numbered 82,328.

Computer, electronics and telecommunications firms have already announced 19,779 cuts since the beginning of the fourth quarter. Job cuts in the technology sector are now averaging 22,358 per month in the second half of year, up from a monthly average of 8,498 in the first half. At the current
pace, the year-end total could reach 180,000, which would be the largest annual total since 2003, when technology firms announced 228,325 job cuts.

“In addition to Sun Microsystems’ announcement, Applied Materials and National Semiconductor have announced job cuts in November. By the end of the year, we may also see cuts from Cisco Systems, Qualcomm and Nokia, all of whom are reporting falling sales amid the weakening economy,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

“The tech sector is simply the latest victim in this downturn that began last year with the collapse of the housing market, and quickly spread to the financial markets. Since then, the impact has rippled throughout the economy and job cuts have surged in several industries, including retail, transportation, media, entertainment and leisure, automotive and even health care. Businesses and consumers have slashed their spending and no industry is immune,” he added.

[Image credit: Someecards]

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