M&A

Now This M&A Is Just Plain Sensible

On Monday, semiconductor manufacturer Analog Devices confirmed it will acquire Maxim Integrated Products, another chipmaker, for $21 billion in an all-stock deal. M&A (Maxim&Analog) will have a combined enterprise value of $68 billion. 

Now, on to the task of making the story more interesting than that paragraph. I promise we’ll get into 5G and auto tech later.

The chipmakers are leveraging synergies 

I’m not off to a very exciting start, so let’s try again: This is one of the largest U.S. mergers announced this year. 

Maxim and Analog are major players in a fragmented market. By combining forces, the companies say they can cut $275 million in redundant administrative and marketing costs over two years. The tie-up will also help Analog go toe-to-toe with top dog Texas Instruments. 

Why analog when all we talk about is digital?

Analog semiconductors process real-world information—temperature, speed, sound, and electrical currents—and translate it into digital outputs. This newsletter typically features digital semiconductors, which process 0s and 1s. 

Analog chips are more specialized than their digital brethren...with long product cycles, less cutting-edge fabrication techniques, and builders' talent honed over more time. As for M&A:

• Analog focuses on industrial and healthcare applications. It has fabs in the U.S. and Ireland. 
• Maxim focuses on the automotive and data center verticals. Its fabs are located in Texas, California, and Oregon. 

If the deal gets the regulatory go-ahead, what next?

The bigger Analog beast will focus on increasing market share in the automotive (where Maxim is more competitive) and 5G chip sectors. The technologies require more digital and analog chips, and work with long life cycles: The average age of a U.S. vehicle is 11.8 years, while cellular networks tend to be upgraded every decade.

Bottom line: There’s a gold rush to capture value from the growing market of car computers and telecom infrastructure—and it includes chips. 

RETAIL

Smart Carts

First, Amazon set out to digitize brick-and-mortar shopping by filling its Go stores with cameras and sensors. Now it’s packing that tech into a shopping cart, according to an Amazon announcement yesterday. 

Later this year, an Amazon grocery store in LA will pilot the Dash Cart, which uses cameras, computer vision, weight sensors, and a touchscreen interface. Using the cart, shoppers can check out sans cashier or credit card. ~Contactless for the coronavirus era~

The OG smart cart 

Dash Cart sure looks like smart carts from startups Veeve and Caper. The latter has deployed carts to a few North American locations. In January, Caper CEO Lindon Gao told me the cart represents a simple way for supermarkets and stores to upgrade their technology. 

From the customer’s POV, “If I could just check out from the cart, wouldn’t that make retail so much simpler?” Gao noted. He also said Caper carts increased average checkout purchases by 18%, thanks to a built-in recommendation system.

• If Amazon deploys Dash Cart more widely, I’d expect it to also integrate a smart recommendation system.  

Bottom line: Smart carts could be a cost-effective alternative to renovating an entire store. Also, my beat is converging with that of Retail Brew writer Halie LeSavage.

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VC

Fundraising During COVID-19, Ed. 9

Drones: Skydio is emerging as the de facto drone rival to China’s DJI by focusing on autonomous software. The California startup announced a $100 million Series C this week, using the occasion to unveil its new X2 enterprise drone (pictured above).  

Robotic process automation: RPA has piqued investors’ interest during the pandemic. On Tuesday, RPA startup UiPath got a piece of the excitement, raising a $225 million Series E and unlocking decacorn status with a $10.2 billion valuation.

Telemedicine: Yesterday, Doctor on Demand announced a $75 million Series D. Something, something, years of telemedicine adoption in months…

Chipmaking: Chinese startup Eswin raised a $283 million Series B. The deal was a month ago, but I’m still including it because 1) that’s a large Series B and 2) China developing chip self-sufficiency is a key storyline of the 2020s.

EVs: As Tesla’s stock hangs out in the stratosphere…

• Ford- and Amazon-backed Rivian raised $2.5 billion in fresh financing last week. 
• Karma Automotive received a $100 million lifeline from investors, per Bloomberg.
• Fisker recently raised $50 million to hold it over until a Q4 IPO (more on that below).

BITS & BYTES

Special edition, featuring a mini Q&A and no Read.

Stat: Google is investing $4.5 billion in Jio for a 7.73% stake. Just like that, Google has completed 45% of its India Digitization Fund investing (which the company announced Monday). I’ve updated the Jio tracker accordingly. 

Three quotes: 

• “The car industry is so capital-intensive. I’ve done this before. I really didn’t see the possibility of raising a billion dollars in private financing that easy.”—Fisker CEO Henrik Fisker told me Monday about his startup’s plans to go public via SPAC. 
• “Investors are seeing now that there’s a real possibility that several EV startups will emerge and take over some of the space that traditional carmakers [have occupied]. Obviously Tesla has been a big driver.”
• “What we have seen is that it’s not enough just to make an electric car. You’ve got to have a very interesting proposition.”

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WHAT ELSE IS BREWING

• A German court ruled that Tesla misleadingly advertised “full potential for autonomous driving” and “autopilot inclusive” vehicles, and banned the carmaker from including the terms in marketing materials. 
• Zoom unveiled a $599 all-in-one communications device with a 27-inch screen, pre-loaded video chat software, eight microphones, and three wide-angle cameras. 
• SoftBank is mulling a full or partial sale of chip designer Arm Holdings, the WSJ reports. 
• Michael Kratsios, the White House’s CTO, will also become the Pentagon’s tech chief, Reuters reports. 
• TuSimple is partnering with Navistar to produce and develop self-driving semi trucks by 2024. The startup also recently announced an autonomous freight network.
• The U.K. is officially banning Huawei from its 5G network. On Monday, carrier BT warned ripping up and replacing Huawei gear in all telecom infrastructure could cause service blackouts.

TRIVIA

Given all the EV news this week, it’s only right that we head down electric avenue. Today’s trivia tests your knowledge of the EV ecosystem.  

Take the quiz here.

TECH THINGAMABOBS

For the Theranos tea: Stanford Innovation Lab’s new podcast had Theranos whistleblower Erika Cheung on as its second guest. Worth a listen. 

For Pacific Northwest readers: Check out The DL, a newsletter about tech and startup investing in the Microsoft-Amazon region of the U.S.

ICYMI

Catch up on the top Emerging Tech Brew stories from the past few editions: 

• TikTok faces timeout
• Jio’s party round
• Nvidia passes Intel in market cap