On October 27, leading mobile chipmaker Qualcomm confirmed the purchase of NXP Semiconductors for $47bn – Europe’s largest tech acquisition to date. The deal brings together two of the world’s most valuable chipmakers and marks the latest move in a wave of consolidation activity within the chip industry.
“With innovation and invention at our core, Qualcomm has played a critical role in driving the evolution of the mobile industry”, Qualcomm chief executive, Steve Mollenkopf, said in a statement.
“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.”
According to Qualcomm, the combined company will generate annual revenues in excess of $30bn – while saving $500m within two years of closing. Following the deal’s confirmation, Qualcomm’s stock climbed 13 percent, while shares in NXP rose 22 percent.
Qualcomm’s acquisition of NXP will help quell fears of the chipmaker’s over reliance on the stagnating smartphone industry
Qualcomm has emerged as the world’s leading manufacturer of mobile chips – providing the technology for smartphone giant Apple and the competing Android market. Meanwhile, NXP has long established itself as a leading chip provider to the rapidly evolving automotive industry, with a specialism for in-car infotainment and vehicle safety systems. The Dutch chipmaker also manufactures for so-called ‘internet of things’ devices – such as home automation, traffic monitoring and cloud computing – and its chips are widely used in contactless and mobile payments.
The acquisition enables Qualcomm to expand its operations beyond a smartphone market which has cooled in the last year. According to the International Data Corporation, the first quarter of 2016 witnessed the smartphone market post its smallest year-on-year growth to date – largely led by the saturation of smartphones in developed economies. On October 25, industry leader Apple reported its first decline in annual sales and profit in over a decade, while rival Samsung saw its operating profit fall by 30 percent as a result of the well-publicised Galaxy Note 7 debacle.
Qualcomm’s acquisition of NXP will help quell fears of the chipmaker’s over reliance on the stagnating smartphone industry. In an official statement confirming the merger, Qualcomm identified the automotive, security and networking industries as areas of particular interest.