Sage Microeletronique Corp acquired Initio Corporation on the last day of 2015. Since the second half of 2015, Chinese companies were frequently making acquisitions to integrate upstream and downstream sectors of the semiconductor industry. While the shockwaves of Tsinghua Unigroup's recent acquisitions were still rippling through the semiconductor industry, China's only solid-state storage controller chip company, Sage Microelectronique Corp (hereinafter referred as Sage Micro), signed an agreement to acquire Initio Corporation (hereinafter referred to as Initio).
Initio is a turnkey storage and retrieval solution provider and also has an extensive line of bridge controller IC products. Sage Micro has also acquired Initio's entire bridge controller IC product line through its US-based wholly-owned subsidiary. The acquisition also includes Initio's related IP portfolio accumulated over two decades as well as its trademark and brand. The price of the acquisition has not been disclosed.
Initio, a globally renowned supplier of bridge controller ICs, was founded in 1994. It specializes in high-speed transmission interface control technologies, including SATA and USB, as well as other high-speed interface bridge controller ICs. Its customers include first-tier global optical drive and hard drive suppliers such as WD and Seagate. According to information from reliable sources, Sage Micro's CEO Dr. Jerome Luo & its CTO Chris Tsu worked in Initio's R&D Department from 2008-2011. In addition, Larry Ko, who was Initio's founder and vice president of engineering, also joined Sage Micro one year ago. The founders history of working together will assure that the integration of the two companies will progress smoothly and quickly.
After acquiring Initio, Sage Micro will integrate its many bridge controller IC product lines. Through this acquisition, Sage Micro has not only obtained SATA and USB physical layer technologies, but also related patents and certifications. Sage Micro has become China's only vendor that possesses a full line of storage controller IC technologies and products. Going forward, Sage Micro plans on evolving from a solid-state storage IC supplier and memory module vendor, into a storage solutions supplier with a wide range of high-speed transmission interface technologies.
Sage Micro has the most complete propriety solid-state hard drive control IC IP portfolio in China, and has keenly implemented strategies for expanding into the enterprise storage space as well as the data encryption space by adding encryption technologies to its storage controller ICs. Just four years after its founding, Sage Micro gained much interest from investors in China and started trading (#834203) on China's New Third Board (OTC market).
In today's semiconductor industry, Chinese tech companies continue to invest heavily in mergers and acquisitions to expand production capacity. China's state-owned companies have taken aggressive and high-profile approaches to acquire intellectual property with Tsinghua Unigroup recent acquisitions and joint ventures being particular noteworthy. Sage Micro's strategy has been to proceed slowly and steadily, using its technological capabilities as a basis for integrating other teams, placing intellectual property and IC technologies at the core of its strategy. In addition to being particularly low key, Sage Micro's acquisition focuses on Initio's product line as well as its trademark and brand, effectively avoiding the complexities of mergers between companies from different countries and regions, and yet still achieving the desired results. This shows that the people handling the acquisition are not only extremely experienced, but also extremely sophisticated, embodying the low-key yet highly practical and effective style of traditional Chinese business people from Zhejiang. This acquisition has also shown to the world how mature China's high-tech industry has become in terms of learning, strategic thinking, and style. From this point of view, Taiwan's related industries need to adjust their attitudes and ways of looking at China's tech industry.
From the perspective of the storage industry, Sage Micro is implementing a global strategy for development of China's Big Data industry, which differs from Taiwan-based IC design houses' past strategy, which only focused on the PC industry when designing storage products. Taiwan's controller vendors, such as SMI and Phison, are facing difficulties due to the contraction of the PC industry as well as traditional storage needs being replaced by cloud-based storage solutions. Therefore, these companies are in dire need of transformation in terms of their product lines. In contrast to the strategies of Taiwan's companies, Sage Micro has integrated strategies of Big Data storage vendors in the United States and further strengthened information security features to meet requirements of the local market, making it an unexpected rising star in the industry. The Chinese government is fully supporting Tsinghua Unigroup's aggressive acquisitions and encouraging the techno political campaign of "innovation by the whole nation and entrepreneurship by all people." Rising stars in the tech industry such as Sage Micro are aggressively looking for acquisition target. The global storage industry is heating up but these developments have also deepened the crisis faced by Taiwan's controller vendors and have made it even more difficult for them to survive.
In the post-PC era, with Big Data storage trends on the horizon, it can be anticipated that Sage Micro will continue to expand its products and its reach through bold and aggressive strategies. This will have an extremely strong impact on Taiwan's storage IC vendors. We hope that Taiwan's storage IC vendors can quickly rise up to this challenge and devise effective strategies for overcoming the obstacles that lie ahead.
Sage Micro's BlackDisk 10TB SSD with a thickness of only 9.5mm
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