Qualcomm Inc. has agreed to acquire NXP Semiconductors NV for about $38 billion. The deal is the biggest ever in the semiconductor industry, according to news reports.
A Reuters report noted
that the deal is worth about $47 billion including debt.
NXP is the world’s largest developer of chips for automobiles,
a
Wall Street Journal
article said.
The
Journal
report said the deal “puts the spotlight on Qualcomm Chief Executive Steve Mollenkopf, who 20 years ago started at the company he now runs designing the unseen chips used in mobile phones.”
The
Journal
article said most of Qualcomm’s revenue comes from designing and selling chips, but more than half its profits come from licensing its wireless patents to makers of mobile phones. “Qualcomm, unlike NXP, leaves chip manufacturing to others,” the
Journal
article said.
The acquisition will help Qualcomm “reduce its dependence on a cooling smartphone market,” the Reuters report noted. The article also said Qualcomm “sat out the transformative consolidation that has swept the chip industry recently.”
The
Journal
article noted that NXP has about 44,000 employees, while Qualcomm has only 30,000. “In addition, analysts say, NXP has older factories that wouldn’t be easily adapted to make Qualcomm’s chips,” the
Journal
report said. However, the article said, Qualcomm “projects generating $500 million of annualized run-rate cost synerges within two years after the transaction closes.” (Sources: Reuters, Oct. 27, 2016;
Wall Street Journal
, Oct. 28, 2016.)
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