Qualcomm to Acquire NXP in IoT, Automotive Tech Push

Thursday Oct 27th 2016 by Pedro Hernandez
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The mobile chipmaker is spending $110 per share of NXP to broaden its IoT and automotive solutions portfolio.

IoT is the place to be.

Qualcomm, the San Diego-based mobile processor maker, announced today that it is acquiring NXP Semiconductors for $110 per share of NXP stock in a transaction valued at $47 billion. The companies expect the deal to close by the end of 2017.

"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 Qualcomm CEO Steve Mollenkopf, in an Oct. 27 announcement. "By joining Qualcomm’s leading SoC [system on chip] capabilities and technology roadmap with NXP's leading industry sales channels and positions in automotive, security and IoT [Internet of Things], we will be even better positioned to empower customers and consumers to realize all the benefits of the intelligently connected world."

NXP hails from Eindhoven, Netherlands. The company produces chips and electrical components for use in various applications, including IoT, connected cars and even unmanned aerial vehicles (UAVs). In 2015, the company acquired fellow chipmaker Freescale for nearly $12 billion.

The combined company's addressable market will be worth an estimated $138 billion by 2020, per Qualcomm. Together, Qualcomm and NXP are projected to generate $35 billion in annual revenue.

"Jointly we will be able to provide more complete solutions which will allow us to further enhance our leadership positions, and expand the already strong partnerships with our broad customer base, especially in automotive, consumer and industrial IoT and device level security," said NXP's CEO Rick Clemmer. "United in a common strategy, the complementary nature of our technologies and the scale of our portfolios will give us the ability to drive an accelerated level of innovation and value for the whole ecosystem."

The move will also help Qualcomm shake up a sales mix that skews heavily toward mobile products. Currently, Qualcomm derives 61 percent, or $15.5 billion, of its annual revenue from mobile products, $7.9 billion from licensing and just $1.9 billion from IoT, automotive and other supplementary operations.

With NXP, the company the scales shift toward $10.2 billion in sales of IoT, automotive and other solutions, accounting for 29 percent of total revenue. Licensing dollars stay the same at $7.9 billion, but shrink to 23 percent of total revenue while the slice of the pie attributable to mobile products drops to 48 percent on sales of $16.9 billion.

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.

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