Pre-Evaluating the Technical Efficiency Gains from Potential Mergers and Acquisitions in the IC Design Industry

Increased global competition has led to a slowdown in Taiwan's domestic semiconductor industry growth, which has resulted in many semiconductor companies reducing their investments and or seeking mergers and acquisitions (M & As) to increase market power, expand their business territories or increase their competitive edge. However, as there is general uncertainty regarding the efficiencies to be gained from these M & As, there has been an increase in M & A supervision. While past research has explored company operations and management efficiency after mergers, there has been less focus on potential mergers. Therefore, this study used a resample slacks-based measure (RSBM) and merger potential gains models to evaluate potential merger efficiency gains. Data on 29 Taiwanese-listed integrated circuit (IC) design industry firms were collected to evaluate the efficiency of potential M & As, from which it was found that the potential M & As efficiencies had positive and negative values, indicating that efficiency gains were not guaranteed. A positive value was found for a potential M & A between MTK & NOVATEK and MTK & DAVICOM, which meant that a potential M & A would increase operating efficiencies and reduce costs.