• Renesas acquires Sequans Communications for $249 million, expanding into the cellular IoT market.
• The acquisition provides Renesas access to Sequans' expertise, customer base, and partnerships in the 5G/4G cellular IoT sector.
• With cellular IoT module shipments expected to exceed 1.2 billion units by 2030, this strategic move aligns with Renesas' expansion plans and reflects a broader trend of consolidation in the IoT market.

Japanese semiconductor manufacturer Renesas Electronics has acquired France-based Sequans Communications, a pioneer in 5G/4G cellular IoT chips and modules. The acquisition will enable Renesas to expand its portfolio and expertise in the rapidly growing cellular IoT market. Although Renesas is a prominent name in the world of microcontroller units, the company has not historically specialized in connectivity.

According to the deal, Renesas will purchase all outstanding common shares of Sequans, including American Depositary Shares (ADS), for $3.03 per ADS in cash. This values Sequans at around $249 million, considering net debt. The transaction is expected to close by Q1 of calendar year 2024, subject to regulatory approvals.

Here are some analysis of the deal between Renesas and Sequans:

• Renesas acquires Sequans to bolster its cellular IoT capabilities and tap into the expanding market. With this acquisition Renesas gains access to Sequans' US and European customer base, enhancing global reach and market growth.
• The partnership between Renesas and Sequans, which began in 2020, has already resulted in successful collaborations to develop modules that combine embedded processors and analog front-end products with wireless chipsets for IoT applications. Sequans has the broadest product portfolio of its non-Chinese competitors except Qualcomm which is why Renesas acquired Sequans.
• The Renesas-Sequans collaboration is primed to meet the rising demand for smart solutions. The merger offers diverse choices for customers seeking to reduce dependence on the Chinese ecosystem and gain valuable expertise from a single source.
• Renesas plans to integrate Sequans' connectivity products, aiming to strengthen its presence in the Wide Area Network (WAN) market. They will collaborate on 5G and high-performance 4G modules based on Sequans' Taurus 5G modem and Renesas' analog front-end tech.

Renesas' Acquisitions Over Time

Source: Counterpoint Research

Conclusion

According to Counterpoint’s report on IoT trends, the IoT market is highly fragmented, with over 4,000 players in IoT value chain competing for a share. This fragmentation has led to low margins and has made it difficult for companies to grow and expand. Consequently, there has been a wave of consolidation in the market, with companies merging or being acquired by larger players, a trend that is expected to continue as the market matures. In 2022, there were significant acquisitions within the IoT module industry, such as Telit’s acquisition of Thales and Mobilogix’s cellular IoT divisions, Semtech’s acquisition of Sierra Wireless, and Aeris Communications’ acquisition of Ericsson’s IoT accelerator and connected vehicle cloud business. As the cellular IoT module market continues to mature, we expect more consolidations aimed at providing improved solutions and maintaining competitiveness. Non-Chinese brands are now following the trend of becoming integrated players in the IoT value chain like Chinese module vendors, and it seems like Renesas is also following suit. For Renesas to compete with Chinese module giants like Quectel and Fibocom, it is crucial for them to develop a strong and effective business strategy specific to each international market they want to operate in.

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• Renesas electronics acquired Sequans a strategic move into cellular IoT