IC Insights pointed, three enormous acquisition agreements in 1H15 have already catapulted 2015 into the M&A record books. First, NXP announced an agreement in March to buy Freescale for $11.8 billion in cash and stock. In late May, Avago announced a deal to acquire Broadcom for about $37 billion in cash and stock, and then four days later (on June 1), Intel reported it had struck an agreement to buy Altera for $16.7 billion in cash. Avago’s astonishing deal to buy Broadcom is by far the largest acquisition agreement ever reached in the IC industry.

IC Insights said that 2015 has become a perfect storm for acquisitions, mergers, and consolidation among major suppliers, which are seeing sales slow in their existing market segments and need to broaden their businesses to stay in favor with investors. Rising costs of product development and advanced technologies are also driving the need to become bigger and grow sales at higher rates in the second half of this decade.

The emergence of the huge market potential for the Internet of Things (IoT) is causing major IC suppliers to reset their strategies and quickly fill in missing pieces in their product portfolios. China’s ambitious goal to become self-sufficient in semiconductors and reduce imports of ICs from foreign suppliers has also launched a number of acquisitions by Chinese companies and investment groups.

IC Insights believes that the increasing number of mergers and acquisitions, leading to fewer major IC manufacturers and suppliers, is one of major changes in the supply base that illustrate the maturing of the industry. In addition to the monstrous M&A wave currently taking place, trends such as the lack of any new entry points for startup IC manufacturers, the strong movement to the fab-lite business model, and the declining capex as a percent of sales ratio, all promise to dramatically reshape the semiconductor industry landscape over the next five years.