When searching for moments of buy-out boom hubris, the decision to leverage up semiconductor companies rates highly. In the third quarter of 2006 a Kohlberg Kravis Roberts-led consortium bought Philips’ semiconductor unit NXP for an enterprise value of $8.3bn, and Blackstone headed the $18.5bn purchase of Freescale from Motorola. Both paid around 11 times what turned out to be cyclically boosted earnings, before interest, tax, depreciation and amortisation.

Almost as soon as the signatures were dry, the semiconductor industry headed into a downturn prompted by a build up of customer inventories. A possible recovery is now likely to be throttled by slowing economic growth. When funding was arranged for NXP the expectation was that gross debt over the cycle would not exceed five times trailing ebidta. As of September it stood at 6.5 times. For Freescale it is slightly higher. And neither is generating much cash flow after capital expenditure and interest payments.