One of the two largest European semiconductor M&A exits since 2001
Chipidea is a prime example of an established business that used external financing intelligently to manage a careful geographic and business line expansion plan.
In 2002, Kennet initiated a project to identify European technology companies focusing on the problem of power management. We believed that the increasing adoption of more powerful wireless devices would create high demand for power-efficient technologies at multiple levels - including batteries, semiconductor chips, and displays.
Portugal-based company Chipidea had a range of power management semiconductor Intellectual Property (IP), which it licensed to chipmakers. Although power management represented only a small part of Chipidea's business, Kennet became interested in the company for several reasons:
- Chipidea's area of expertise was analog and mixed-signal semiconductor IP. Analog and mixed-signal engineers are a scarce resource within the semiconductor industry. Chipidea had established a critical mass of engineers in this area.
- The explosive growth in markets for portable digital media devices of all kinds, including mobile phones, digital music players, digital cameras, portable video players and digital radio players, was driving sustained demand for analog semiconductor functionality
- Semiconductor IP is a European strength. Several of the most important providers of semiconductor IP are headquartered in Europe, including the worlds' largest vendor, ARM Holdings.
- Chipidea's founder and CEO, Jose France, had successfully grown the business with very little external capital.
Kennet's Michael Elias began to develop a relationship with Jose Franca and, in mid-2004, began discussing an investment from Kennet to finance continued expansion of the business.
In May 2005, Kennet led a €12 million financing alongside co-investor Vision Capital and Portuguese Banks BCP and BPI. Michael Elias joined Chipidea's board of directors.
As with most Kennet investments, a portion of the funding was invested in the company, while the remainder was used to purchase existing shares from the company's founders. This rewarded the founders for value created in the business to date, and enabled them to feel comfortable with the risks of pushing for further growth.
Following Kennet's investment, Chipidea expanded its business considerably, building the world's largest group of analog and mixed signal engineers in a private company. In February 2007, Chipidea acquired the assets of Nordic Semiconductor's Data Converter IP Business Unit, adding a significant catalog of IP to its analog and mixed-signal portfolio. By June 2007, Chipidea had 312 employees and had operations in Portugal, Belgium, France, Poland, China, and Macau.
During the summer of 2007, Michael was instrumental in leading the board's discussions with potential acquirers that had approached the company. In August 2007, Chipidea was acquired by MIPS Technologies (NASDAQ: MIPS), for consideration of up to $153.6 million.
This acquisition was one of the two largest European semiconductor M&A exits in the past six years, and represents yet another example of a home-grown European technology company that was able to achieve global market leadership.