Qualcomm To Purchase NXP Semiconductors For $47 Billion, Extend Chip Domination To Automobiles and IoT


Mobile chip maker Qualcomm has inked a definitive agreement to purchase NXP Semiconductors in a deal valued at around $47 billion. The board of directors of both companies gave unanimous approval for the acquisition, which will see Qualcomm buy all of NXP's stock at $110 per share, an 11.5 percent premium over NXP's closing price on Wednesday.

Should the deal receive regulatory approval, Qualcomm will be in position to become a major player in the fast growing connected car market. NXP is a leading chip maker in the automotive industry with mixed-signal semiconductor solutions for in-vehicle infotainment, networking, and safety systems. The company's products are found in 14 of the top 15 infotainment systems.

"With innovation and invention at our core, Qualcomm has played a critical role in driving the evolution of the mobile industry. The NXP acquisition accelerates our strategy to extend our leading mobile technology into robust new opportunities, where we will be well positioned to lead by delivering integrated semiconductor solutions at scale," said Steve Mollenkopf, CEO of Qualcomm Incorporated. "By joining Qualcomm's leading SoC capabilities and technology roadmap with NXP's leading industry sales channels and positions in automotive, security and IoT, we will be even better positioned to empower customers and consumers to realize all the benefits of the intelligently connected world."

Qualcomm's timing here is savvy, as the proposed buyout comes when smartphone sales are starting to slow. This acquisition gives Qualcomm another major market segment to pursue, one that's at the relatively early stage and has yet to truly bloom.

Semiconductor Ranking

Once the deal is complete, Qualcomm expects the combined company to rake in more than $30 billion in revenue annually. Should that prove accurate, it could boost Qualcomm's ranking among semiconductor suppliers to second place based on revenue, up from its current fourth place spot behind SK Hynix (No. 3), Samsung Electronics (No. 2), and Intel (No. 1), according to both IHS and Gartner.

"Qualcomm's NXP acquisition should increase their smartphone and tablet BoM (Bill of Materials) and gets the company an instant footprint into more automotive and IoT. Qualcomm is a giant in smartphone and tablet SoCs, modems, and WiFi. NXP is a giant in low power analog, NFC, Bluetooth, low-end IoT SoCs and automotive. The two make a good combination," said Patrick Moorhead, President and Principal Analyst, Moor Insights and Strategy. "Merging operations will take some time after the close, but the good news is there’s little overlap which should make it easier than other mergers and acquisitions."

Qualcomm said it intends to fund the transaction with cash on hand and new debt. Barring any setbacks, the deal is expected to close by the end of the year.