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October 27, 2016updated 31 Oct 2016 11:58am

Qualcomm, NXP Semiconductor in biggest ever chip deal

Broadcom joins in on the consolidation sweeping the semiconductor industry, acquiring NXP Semiconductors in a deal worth $47 billion.

By Ellie Burns

In what is shaping up to be the biggest ever deal in the semiconductor industry, Qualcomm is to buy NXP Semiconductor for around $38 billion.

The acquisition of NXP Semiconductor will expand the reach of Qualcomm’s semiconductor portfolio which has been under increasing strain in the light of slowing smartphone sales and increasing competition from Chinese and Taiwanese rivals.

Currenlty Qualcomm derives the majority of its profit from its wireless portfolio, with patents licensed to the mobile industry. Qualcomm will now be able to complement its wireless portfolio with the smartphone business of NXP, which sees the semiconductor giant provide chips to both Android smartphone manufacturers and Apple.

US-based Qualcomm will also benefit from NXP’s status as the world’s biggest supplier broadcomof electronics to the automotive industry, an accolade won by the Eindhoven-based NXP after buying Freescale Semiconductor in December last year.

Beating Avago’s $37bn acquisition of Broadcom in 2015, Qualcomm’s offer has an equity value of $37.88 billion – based on Reuters calculations which took into account the company’s 344.4 million diluted shares as of Oct. 2.The companies said that the deal, including debt, it is worth roughly $47 billion, the companies said.

The combined company is expected to have annual revenues of upwards of $30bn.

Qualcomm plans to fund the deal with cash on hand and new debt, with the acquisition expected to be completed by the end of 2017.

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This is just the latest deal in an industry which has been grabbed by sweeping consolidation. In 2015 there were various billion dollar deals, with the biggest seeing Avago buy rivals Broadcom for $37bn.

So far this year there has been $75bn spent on deals in the sector. UK’s microprocessor designer ARM was acquired by Japan’s SoftBank for $32bn earlier this year.

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