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September 30, 2016

Qualcomm eyes $30bn NXP Semiconductors acquisition for stake in IoT market

Deal could give Qualcomm a strong position in the automotive industry.

By James Nunns

Qualcomm is rumoured to be in talks to acquire NXP Semiconductors in a deal that could well over $30bn.

NXP is a semiconductor manufacturer based in the Netherlands which is valued at around $33 billion; Qualcomm is valued at over $100bn.

A deal between the two companies could be struck in the next two to three months, according to the Wall Street Journal.

The deal would see a consolidation in the semiconductor market that would give Qualcomm a powerful position in the car manufacturing industry, as this has been a strong market for NXP.

In December 2015 NXP sealed a $12bn deal to buy Freescale Semiconductor, a U.S based firm which boosted the company’s position in the car electronics industry.

Reports state that while Qualcomm may be the main company being linked with the acquisition, NXP may also consider offers from other companies, according to reports.

The deal for Qualcomm would help it to diversify its portfolio in the light of slowing smartphone sales and increasing competition from Chinese and Taiwanese rivals. Qualcomm supplies both Android and Apple.

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NXP Semiconductors has a strong presence in the car industry.

NXP Semiconductors has a strong presence in the car industry.

With sales in the smartphone market slowing and the interest in driverless and automated cars growing, the deal seems like a sensible one for Qualcomm.

Mergers and acquisitions in the semiconductor space have been taking off in the past few years with companies like Intel Altera for $16.7bn and Avago acquiring Broadcom.

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.

NXP reported revenues of $6.1bn and $1.5bn profit last year and if a deal were to be struck then it is estimated that it could add 30% to Qualcomm’s earnings before any cost savings.

In essence this would be a move aimed at diversifying its portfolio and looking to capitalise on the rise of the Internet of Things.

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