Beckoning a gigantic move in the automotive space, Qualcomm, a smartphone chipmaker dwindle the silicon space a little further with a budding acquisition of NXP Semiconductors, a Netherlands-based company in a deal worth over $30 billion. In a series of consolidation moves made by semiconductor industry recently, this takeover of NXP by Qualcomm is the latest one.
NXP is headquartered in the Netherlands but does trades on the Nasdaq and has become a chief trader of chips used in NFCs (near-field communications) that benefits phones in interacting wirelessly with the help of payment terminals equipment.
Purchasing NXP would add remarkable scale to Qualcomm along with its prime specialty in designing and making chips for smartphones. Yet this semiconductor enterprise tackled pressure last year from an activist verge fund over its strategies for boosting growth in the market. Although this process weighed a lot but later it abandoned resulting in a latent split of its businesses.
Actually NXP Semiconductors is a very large company and rather than a licensor of designs it is also a supplier of components. NXP is the 5th largest supplier of in the world with more than 40,000 employees in 35 countries. And when talking about chips related to security-based identification NXP Semiconductor is the trailblazer especially applications related to car. Also, last year NXP itself underwent with one consolidation of its own, merging with Freescale Semiconductor in a deal worth $40 billion.
One more claim to recognition for NXP is the NFC co-creation with Sony. Qualcomm’s business extents not just semiconductors as it has a whole subordinate dedicated to that but also wider telecom services and products.
To sustenance this augmented plea for mobile transactions, suppliers of mobile device tackled a hurdle to scale up their solutions that are firm enough to keep pace with growing market needs. The collaboration of NXP and Qualcomm Technologies permits mobile device manufacturers to accelerate their time to market, and get advantage from the robust advancement in the mobile transactions industry.
For Qualcomm Technologies, accumulating NXP’s products to its own listing makes logic, as it helps Qualcomm in diversifying its trade away from the smartphone market, and enlarge its automotive semiconductor chips business with merger of NXP that holds significant market share in the space.
As Qualcomm already governs automotive telematics but by purchasing NXP, the organization would gain powertrain, an automotive processor portfolio, in-cockpit market share, and safety, as a result it will craft the first end-to-end semiconductor auto supplier of the future.
So, a joint company would claim annual revenue of $30.5 billion. Nevertheless, the productivity of the two companies’ revenues couldn’t be more different. Merging NXP with Qualcomm stock will result into emergence of a tech giant operating as an automotive semiconductor company, raking in substantial revenues largely deriving from operational profits.
Moreover, the first end-to-end semiconductor auto supplier would truly be inexpensive than the current Qualcomm when it will be treasured on sales, and marginally more expensive when valued on earnings that could thrive as Qualcomm works towards steadily bring NXP’s profit margins up to par with its own.
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