Last Monday Texas Instruments Incorporated and National Semiconductor announced they signed a definitive agreement for Texas Instruments to acquire National for $25 a share in a transaction that reaches a total of about $6.5 billion.

Texas Instruments is a leader in the field of analog processors, now it acquires a competitor which has a market share much smaller but will lead to the completion of TI products thus with an optimization of the production, an expected reduction in costs and a technological synergy that will strengthen the position of the new colossus. It’s precisely on this point that Rich Templeton, TI chairman, has based his comment about the acquisition.

On the other hand National Semiconductor manufactures components used in many fields of electronics with a strong presence in the field of power management but its products also go from amplifiers to LEDs, audio circuits, photovoltaic and many others for a total of about 12,000 products that will lead to an expansion of Texas Instruments offer.

It’s for this reason that Don Macleod, National’s CEO, said he sees the completion of Texas Instruments products in a positive way and also the opportunity to take advantage of TI’s sales network to expand significantly  National’s products customers. It’s estimated that TI’s sales network is ten times bigger than National’s, whose products will therefore enjoy a much greater promotion.

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Now we must wait until the competent authorities approve the merger. It’s estimated that the operation could be completed in six to nine months.

On paper this merger has every chance of ending in a positive way for the remarkable level of Texas Instruments and National Semiconductor’s technologies, which together may be able to offer very high quality products at good prices.

Obviously in these cases there are always concerns about the possibility that the integration of the two companies will lead to layoffs and that the merger of the two companies might bring detriment to competition.

Currently there are no statements about the consequences of the reorganization within the new company. We can hope that a growing market like that of analog semiconductors will bring at least in the long term to the creation of new jobs.

As for the competition we’re talking about two companies that have a share of less than 20% combined in the analog semiconductor market, so we are far from a possible monopoly. It’s however true that the new company will be very strong both in terms of the quantity of products that will sell and with regard to their technological level so there will certainly be implications for the market. It will be up to the other competitors to work hard not to fall behind, perhaps also with other acquisitions.