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Welcome back! Giant tech companies are wreaking havoc on chipmakers, outcompeting them or shifting to new suppliers, and that’s spurring a dealmaking spree in the industry. We broke news last night about the largest chip deal of the year, Skyworks Solutions buying rival chipmaker Qorvo for $10.6 billion. Both companies, which make radio frequency chips for mobile phones, have been hit by a decline in their sales to Apple. Over the weekend, we scooped the news that AI chipmaker SambaNova is working with an investment bank to explore a sale, after its recent efforts to raise money from investors stalled. The startup was last valued at $5 billion and raised $1.1 billion from big-name investors like GV, Intel Capital, BlackRock and Softbank Vision Fund. SambaNova’s decision to consider a sale is just the latest among chip startups finding their ways to larger acquirers. In June, Advanced Micro Devices hired away the staff behind Untether AI, which develops chips for running AI models. And earlier this month, Meta announced it would acquire Rivos to boost its in-house chip development. The Meta-Rivos deal happened before the startup started selling its chips. It was aiming to release a graphics processing unit as early as next year and held talks to partner with Intel on future chip designs, according to people familiar with the matter. It already hit its fundraising goal before buyers came in with buyout offers. Intel declined to comment. Rivos didn’t respond to a request for comment. Running a chip business is costly, which adds to the pressure on both startups and established chip companies with slumping businesses. It requires large engineering teams, expensive software tools, high manufacturing costs and, for startups, years before they have a working chip to sell. Some of these companies also worry about keeping their best employees, who are in high demand. In AI chipmaking, Nvidia’s dominance and its sticky CUDA software, which accompanies its chips, make other non-Nvidia chips a hard sell. As a result, some companies are selling their chips to the Middle East, where export controls restrict the sale of Nvidia’s most advanced chips. Those rules are now loosening under President Donald Trump’s administration, and big companies such as Qualcomm are inking deals in the region. The Rivos deal and a potential sale by SambaNova are leaving behind competitors such as Groq, Cerebras, d-Matrix, Tenstorrent and FuriosaAI. Bankers said they’re still good merger and acquisition targets, particularly for other hyperscalers building giant data centers and chipmakers lagging behind in AI chips. Even startups with little or no revenue could be attractive to buyers for their talent and design capabilities. Microsoft, which is trailing behind rivals on its custom AI chips efforts, could be on the lookout for an acquisition, even though it told outside bankers that dealmaking is not an immediate priority. Microsoft declined to comment on possible deals. Intel, which posted upbeat earnings last week, has considered an AI chip acquisition for a while and might finally decide to make a move. For Skyworks and Qorvo, the deal gives them the scale to compete with bigger chipmakers such as Broadcom and Qualcomm. It also helps them address their declining sales to Apple, which itself is feeling pressure as consumers hold on to their phones longer. In a statement, Skyworks CEO Phil Brace said the combination would have more ability to “bring even greater innovation to our customers.” In the race to build AI, companies that fix bottlenecks in data centers could be an area ripe for deals. Moving massive amounts of data between thousands of chips is a slow, expensive and power hungry process, no matter how fast the chips themselves can run AI models and applications. Semiconductor giants are making moves. In June, Qualcomm announced its $2.4 billion bid for U.K.-based Alphawave Semi, which develops high-speed interconnectivity solutions to move large volumes of data faster in data centers. Nvidia struck a $900 million license-and-hire deal with networking startup Enfabrica, whose technology could help Nvidia connect its GPU clusters to serve effectively as a single computer. Photonics startups like Celestial AI, Lightmatter and Ayar Labs could be up for grabs, bankers said. The companies are betting on a major architectural shift from copper to laser light for creating faster links between AI chips and memory chips. On the geopolitical front, this week could bring news with an impact on dealmaking. President Trump and China’s leader, Xi Jinping, are meeting Thursday. If they reach a broad deal on trade and other issues, that could ease some concerns about antitrust issues on deals. If they fail, that could put a damper on big deals in the coming months.
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