CHANDLER, Ariz. - Microchip Technology Inc . (NASDAQ:MCHP) today announced the completion of its acquisition of VSI Co. Ltd., a Seoul-based provider of high-speed connectivity technologies for automotive applications. The deal, for which financial terms were not disclosed, is aimed at strengthening Microchip's position in the in-vehicle networking (IVN) market, particularly in the area of Advanced Driver Assistance Systems (ADAS).
The acquisition brings VSI's expertise in camera, sensor, and display connectivity based on the Automotive SerDes Alliance (ASA) standards into Microchip's automotive networking portfolio. This move is expected to enhance the company's offerings in response to the growing demand for sophisticated vehicle technologies. According to Yole Group, the market for automotive radar, camera, and LiDAR modules is projected to more than double to $27 billion in revenue from 2022 to 2028.
Mitch Obolsky, senior vice president of Microchip's automotive products, highlighted the strategic fit of VSI's technology with Microchip's existing capabilities. He noted that the industry is coalescing around key IVN technologies such as Ethernet, PCIe, and ASA Motion Link, and with VSI's addition, Microchip can now address all three areas.
VSI's CEO, Steve Kang, expressed enthusiasm about joining forces with Microchip to tap into the expanding ADAS and digital cockpit connectivity market. VSI has been instrumental in developing ASA Motion Link products and has collaborated with major automotive manufacturers like BMW (ETR:BMWG) to demonstrate the technology's readiness for production vehicles.
The ASA, with over 145 members including Microchip, is an industry group that promotes open standards for IVN. With the acquisition, Microchip aims to offer a comprehensive suite of products and solutions for next-generation software-defined vehicle architectures, including security, microcontrollers, motor control, touch, and power management.
The integration of VSI's team and technology is expected to bolster Microchip's offerings in a market that is increasingly driven by the need for higher bandwidths and more complex data and video links.
The acquisition is based on a press release statement from Microchip Technology Inc.
InvestingPro Insights
Microchip Technology Inc.'s strategic acquisition of VSI Co. Ltd. underscores its commitment to expanding its footprint in the in-vehicle networking market. As the company navigates this growth, investors and stakeholders can consider several key financial metrics and insights provided by InvestingPro. Microchip Technology, with a robust market capitalization of $47.6 billion, signals a strong position within the industry. The company's P/E ratio stands at 20.43, reflecting investor sentiment about its earnings potential. Notably, Microchip Technology has demonstrated a dedication to shareholder returns, having raised its dividend for an impressive 12 consecutive years, which is a testament to its financial stability and commitment to delivering value to its investors.
Despite the positive outlook on dividends, it's worth noting that analysts have revised their earnings expectations downwards for the upcoming period, which could impact investor perspectives. Additionally, Microchip Technology is trading at a high P/E ratio relative to its near-term earnings growth, suggesting that the stock may be priced optimistically in light of its earnings trajectory. However, it's important to recognize that the company is a prominent player in the Semiconductors & Semiconductor Equipment industry and has maintained dividend payments for 23 consecutive years, showcasing its longstanding reliability in providing shareholder value.
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