NXP deal propels Qualcomm into automotive chip world league

Article By : Christoph Hammerschmidt

NXP, which only relatively recently had concluded the takeover of its rival Freescale, has now itself been swallowed by a much larger competitor.

It's a takeover that is expected to shake up the automotive chip world.

In a ₹3.13 lakh crore ($47 billion) transaction—so far the largest takeover in the semiconductor industry—Californian fabless semiconductor provider Qualcomm has agreed to take over NXP NV of the Netherlands. The move has the potential to change the coordinates in several segments of the semiconductor world, in particular in the automotive market.

NXP, which only relatively recently had concluded the takeover of its rival Freescale, has now itself been swallowed by a much larger competitor. Qualcomm ranks number four in the world semiconductor market, NXP was even after the Freescale takeover not one of the world’s top ten chipmakers. The combined enterprise will achieve sales above ₹2 lakh crore ($30 billion), and the takeover will activate synergies in the range of ₹3,333.11 crore ($500 million), Qualcomm said.

The expertise of both companies is widely complementary. For instance, NXP holds strong market positions in security devices for payment systems, the Internet of Things and automotive-specific semiconductor solutions whereas Qualcomm is a leading provider of chips for the smartphone industry—an area where NXP never really was successful.

There are several examples where the complementary expertise of both partners could significantly improve the combined company’s market position. For example, Qualcomm’s product range in smartphone SoCs and mobile phone modems (3G, 4G and probably soon 5G) can be leveraged to establish NFC and eSE mobile payment solutions. Likewise, NXP’s strength in the market for secure ID, payment cards and public transportation solutions will certainly help Qualcomm to position itself in this area by combining NXPs solutions with its own computing and connectivity platforms.

__Figure 1:__ *Fast-changing landscape: The market for automotive semiconductors, here a snapshot from mid-2016 (Source: IHS)*

 
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