The agreement announced Thursday for Qualcomm to acquire NXP puts emphasis on two key related technologies: IoT and automotive electronics. In a letter to customers, NXP president and CEO Rick Clemmer and executive VP for global sales and marketing Steve Owen cited the company’s role in in the automotive areas of ADAS, infotainment, safety, body and networking, powertrain and chassis, and secure access. For IoT, they cited NXP’s broad-based MCUs, application processors, and secure-identification and mobile-transaction technologies.
Dan Gallagher at The Wall Street Journal points out that at $39 billion, the deal represents the “…largest merger ever in the semiconductor industry, edging out the $37 billion combination of Avago Technologies and Broadcom last year.”
Gallagher notes that the $110 per share price represents a 34% premium over NXP’s average closing price over 200 days prior to initial reports of the deal. But the acquisition, he adds, brings “much needed diversification” into the automotive market, which accounts for an estimated 41% of NXP’s business, according to Stacy Rasgon of Bernstein.
In a separate Journal article, Don Clark and Tim Higgins cite IHS Markit estimates that the average new car today has 616 chips, up from 550 in 2013. IC content per vehicle is now worth about $350, up from about $250 in 2000, according to Gartner.
They add that pursuit of automotive applications were key drivers of NXP’s acquisition of Freescale last year and Analog Devices’ decision in July to acquire Linear Technology Corp.
Clark and Higgins write that the market for automotive chips has been fragmented, but the push toward autonomous driving is increasing the need for a powerful central-computing system—as evidenced by Tesla’s announcement that it would use Nvidia devices. They further add that chipmakers with combined specialties will be in a positon to influence what future cars will look like.
They conclude by noting that Qualcomm and NXP will make a push into IoT, which has already influenced chipmakers including Cypress and Intel, as I write here. Intel earlier this month reported sales records for its datacenter and IoT groups. The company said third-quarter revenue in its IoT group rose nearly 19% to $689 million.
