Consolidation continues in the semiconductor market, with two makers of internet of things modules joining forces. Switzerland’s U-blox is paying $52.5 million in cash for SIMCom’s cellular modem products, research and development team and customer base. China’s SIMCom, which is currently owned by SimTech Group, makes LTE modules using chipsets that have been certified for Verizon Wireless’ network.
U-blox said the deal will significantly expand its existing cellular product range and make it a major supplier of cellular modules worldwide. The company said the deal will augment its cellular module business in China, and generate increased revenue in the U.S. and Europe. U-Blox expects revenue to reach half a billion dollars this year, with $75 million coming from the SIMCom assets.
Eventually, U-blox plans to incorporate its own cellular chips into select modules in the combined portfolio. The combined company is expected to continue to source LTE modems from French chipmaker Sequans, which said it will now count SIMCom and U-blox as customers. SIMCom will continue to market its existing products under its brand name.
By joining forces, U-blox and SIMCom are likely to be able to streamline carrier certification, one of the most expensive and time-consuming parts of the cellular IoT chip business. Wireless carriers know they can profit enabling new kinds of devices to connect to their networks, but at the same time they need to be cautious when they share network access.
Craig Miller, VP of worldwide marketing at Sequans, said the carrier certification process can be very expensive, and that he would not be at all surprised to see other module makers work together.
“It’s probably not the last that we’ll see of consolidation in the chip or module or IoT industry,” said Miller. “IoT is so fragmented; there are so many people vying to contribute, it’s going to happen.”
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