ADI Analog Devices Inc

Maxim Integrated Products Inc. (MXIM) recently announced that it created a Corporate Venture Group to invest in startup companies with innovative technologies.

Maxim with its newly formed Corporate Venture Group will make strategic investments in startup ventures and their seed technologies that are concurrent with the company’s core areas of expertise in semiconductor products and services. Where it makes sense for Maxim, it will also extend the partnership deal to nurture the newbies with financial assistance for growth and expansion.

Maxim’s exposure to fast-growing markets, such as smartphone, tablets PC, factory-automation equipment and automotive requires the company to stay abreast of technological advancements. The level of innovation in these markets is typically very high and product cycles are short. Therefore, it is very easy to lose a socket (miss a design cycle), which could result in significant losses for the company.

Maxim expects the venture to result in suitable partnerships that could help it stay ahead of its competitors such as Linear Technology Corp. (LLTC), STMicroelectronics (STM), Analog Devices (ADI) and Texas Instruments Inc. (TXN), among others. The venture will help Maxim to become leader in key market segments.

It will also provide Maxim with access to new, exciting and futuristic technologies that can change the shape of the industry. Maxim will mainly focus on technology for automotive, industrial, mobility and communications as these are the high-growth markets currently.

Maxim has a long history of acquisitions. In 2012, it acquired Genasic Design Systems Ltd. that makes chips for LTE applications. In 2011, it acquired SensorDynamics, a semiconductor company that develops proprietary sensor and microelectromechanical (MEMS) solutions. Maxim has been reasonably active on the M&A front. Therefore, it is possible that the new venture will not only bring partners, but also identify suitable acquisition targets.

In the fourth quarter of 2012 (the last-reported quarter), Maxim posted revenue of $605.0 million, up 5.9% sequentially, down 3.4% year over year and within management’s guidance range of $590.0-620.0 million. Revenue was down across all end-markets in the last quarter.

Currently, Maxim Integrated Products Inc. has a Zacks #3 Rank, implying a short-term Hold rating.

 
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