Qualcomm may buy rival chip-maker

Acquisitions
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Qualcomm may be about to purchase NXP Semiconductors in a multi-billion dollar acquisition

Dutch chip maker NXP Semiconductors is said to be in talks that could see it potentially acquired by Qualcomm.

It comes amid a global slowdown in the mobile sector, and consolidation in the semiconductor industry.

Possible Acquisition

Multiple Partnerships Partner Deal AgreementNXP Semiconductors is a Dutch firm that employs roughly 45,000 people in more than 35 countries around the world. It makes a range of chips including those used in contactless payment systems.

It notably acquired Freescale Semiconductor last December, in a move that created one of the leading providers of automotive electronics.

According to The Wall Street Journal, which listed people familiar with the matter as its source, a potential Qualcomm acquisition of NXP could cost somewhere in the region of $30 billion (£23bn) or more.

A deal could be reached within the next three months, but Qualcomm is also said to be “simultaneously exploring other deal options”.

NXP has a market value of about $28.5 billion (£22bn), while Qualcomm’s is about $93 billion (£72bn).

Semiconductor Consolidation

Qualcomm has so far ignored the consolidation ongoing in the semiconductor industry at the moment. For example, Intel acquired chip rival Altera for $16.7bn (£11bn) last year and Broadcom was sold to Avago for $37bn (£28bn).

Qualcomm makes most of its profits from its wireless patent portfolio that it licenses to the mobile industry, but the majority of its revenue comes from chip sales. Indeed, its silicon is found in numerous Android smartphones and Apple products.

But the smartphone sector has matured and has reached saturation point. This slowdown has forced Qualcomm to look to other sectors of late, most notably the Internet of Things and virtual reality.

The automotive sector could also be a potential growth area, as more and more car makers seek to incorporate ever increasing amounts of technology into their vehicles.