Californian semiconductor specialist Semtech is acquiring Canadian radio and IoT company Sierra Wireless. The purchase price, to be paid in cash, is approximately $1.2 billion and is partially financed by debt. Founded in 1960, Semtech is currently best known for LoRa, a proprietary transmission technology for wirelessly connecting machines (Internet of Things, IoT). Sierra Wireless also relies on IoT, but on connection via mobile networks.
Therefore, according to the managers of both companies, a merger would be edifying. LoRa uses a license-free ISM band for radio transmissions, with all the associated advantages and disadvantages. Although there are no fees for use, you have to share an ISM band with potentially many other users and observe different legal requirements depending on the country. Cellular service costs money, but it can be more reliable than radio frequencies, which anyone can use.
LoRa and LoRaWAN
LoRa can stand for “Long Range” or for “Low Radiation”, the manufacturer does not resolve the ambiguity. With LoRa, small data packets (up to 256 bytes) are transported over long distances with low energy consumption. The radio technology trick: LoRa as a physical layer consists of a narrow-band carrier that is moved up or down in a comparatively wide channel. These transmissions, known as “chirps”, are easily recognizable in general noise and are therefore very robust to interference.
The method is optimized for payloads of a few bytes, think of electricity meter data, temperature readings or GPS coordinates of trackers. LoRa is the physical transmission technology for the LoRaWAN network protocol, which is responsible for network structure, addressing, encryption and channel specifications.
While the patents for LoRa are held by Semtech, LoRaWAN is an open standard of the LoRa Alliance. In addition to Semtech, its members include network suppliers such as Cisco, global telecom groups and hundreds of other companies. Semtech manufactures LoRa transceivers (transmitter-receiver combination) itself or licenses them to other chip manufacturers.
Global Cellular Service
Founded in Vancouver in 1993, Sierra Wireless provides various modules, modems and antennas for wireless communication, especially cellular modems, bluetooth modules, satellite positioning and so on. In addition, there is software, cloud services and a more or less global mobile network service (MVNO) for IoT.
“We believe that the next era of technology growth is the full digitization of the industrialized world – the Internet of Everything,” said Semtech CEO Mohan Maheswaran, “Our vision is to build a simple, horizontal platform with the aim of making this transformation to accelerate, and bring about a smarter and more sustainable planet.” Maheswaran is particularly drawn to the high margins offered by Sierra wireless cloud services.
In addition, Sierra Wireless brings existing customer relationships with it. With the acquired team, Semtech aims to grow in the areas of logistics, asset management, connected cities, public safety, connected agriculture, public utilities including meter reading and endangered species protection.
The takeover still has to be approved by competition watchdogs and Sierra Wireless shareholders. The latter should be well inclined to sell given a premium of 25 percent on the closing price on July 29. Semtech expects the closing in the current financial year 2023 (by the end of April 2023).
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