This would be industry-shattering news if it didn’t make perfect sense and wasn’t already previewed in recent media speculation. Still, no one could have predicted Qualcomm’s desire to snag fellow semiconductor veteran NXP is so fervent that the San Diego-based tech giant agreed to cough up a whopping $47 billion.
The Dutch company, founded way back in 2006, and the generator of $1.4 billion net income on $6.1B revenue last year, is currently “only” evaluated at around $33.5 billion. But clearly, Qualcomm sees a lot of potential there, particularly in the automotive and Internet of Things (IoT) markets, looking to acquire all of the issued and outstanding common shares of NXP Semiconductors for a cool $110 apiece in cash.
The merger has been unanimously approved by the two companies’ boards of directors, though regulatory approvals in “various jurisdictions and other closing conditions” might hold up its completion until late 2017.
Once it goes through, the deal is expected to enhance Qualcomm’s “global leadership in integrated semiconductor solutions”, as well as its “footprint across key growth opportunities.” In other words, given the stagnation of smartphone demand, totally dominating that world is no longer enough for this Intel-challenging chip champion.
NXP’s strengths cover the automotive, broad-based microcontroller, secure identification, network processing and RF power segments, where QCM would sure like to raise its profile or build one from scratch. The combined annual revenue of this post-acquisition monster should exceed $30 billion, with serviceable addressable markets of $138 billion in 2020. Oh, and in case you’re wondering, yes, this financial agreement beats our top five mobile acquisitions up to a few months ago.