There are mega-deals happening in the semiconductor industry, and then there are super-mega deals happening. And if reports are correct, San Diego-based Qualcomm may be very close to finalizing a deal to acquire NXP Semiconductors for $110 per share, or about $37 billion.
The acquisition would be one of the biggest acquisitions in the semiconductor industry in recent memory, rivaling the Avago buyout of Broadcom for $37 billion and Softbank’s summer acquisition of semiconductor platform vendor ARM for $32 billion. Other recent deals include Nokia buying Alcatel-Lucent for $17.3 billion; Intel buying Altera for $16.7 billion; and Western Digital buying SanDisk for $19 billion.
Interestingly, NXP less than one year ago finalized its own mega-deal of buying fellow semiconductor firm Freescale for $11.8 billion. In that acquisition, NXP was able to climb to the top of the ranks of the automotive semiconductor landscape, including autonomous driving technology and advanced driving assistance systems (ADAS) semiconductors.
The story, first reported by CNBC and later by Reuters, confirms the companies are in closed-door meetings finalizing the deal.
Once completed, the acquisition would help Qualcomm move beyond the mobile market and into automotive chip making, industrial technology and the Internet of Things (IoT). With the mobile market floundering in terms of people buying fewer phones (one of the reasons Samsung is exploring other avenues), it makes sense that Qualcomm, which was hurt by the recent Samsung Galaxy Note7 fire-prone issue, is moving into other revenue-generating areas.
According to market research firm IHS Markit, Qualcomm has been getting serious about entering the automotive semiconductor market for a few years now. Its acquisition of CSR helped the company move from the 42nd-ranked automotive semiconductor supplier in 2014 to the 20th-largest supplier in 2015. That acquisition also helped Qualcomm to make inroads in the infotainment segment of automotive semiconductors.
Qualcomm is currently in third place among chipmakers in terms of revenue while NXP is in seventh. The deal would create the second-largest semiconductor vendor worldwide, just behind Intel Corporation.