American chipset maker Qualcomm has agreed terms to purchase NXP Semiconductors of the Netherlands, at a price of $37.88 billion (€34.76/£31.14). The takeover will provide Qualcomm with the opportunity to diversify away from smartphone chips.
Qualcomm is a key player when it comes to smartphone system-on-chips, with its products powering devices such as the Google Pixel, LG G5 and HTC 10.
The purchase of NXP Semiconductors will extend Qualcomm’s reach, with the company becoming one of the biggest suppliers of automotive chipsets. NXP Semiconductors is also active in the Internet of Things market.
As the sales of smartphones cool, Qualcomm will be able to gain significant market share in new sectors. This strategic purchase will mean that Qualcomm is no longer significantly dependent on a single market for its future growth.
The purchase is a highly significant deal for the semiconductor industry, and will become the biggest-ever takeover deal to occur within the sector.
Qualcomm will target big opportunities with automotive chipsets in particular, as the market is currently growing very rapidly.
The total size of the deal, including both debt and the equity value of $38.77 billion, is said to be around $47 billion (€43.13/£38.64).
Reaction to news of the takeover as been positive, with Qualcomm’s share price climbing 4.9 percent.
As the two companies currently operate largely within different sectors, Qualcomm has said that it does not expect regulatory approval to be an issue.
Given the size of the deal, it will take some time to complete, with the takeover not expected to be formalised until late 2017.