The American telecom solutions company Qualcomm Inc. is reportedly in talks with the Dutch industry giant NXP Semiconductors to acquire the company for an estimated $30 billion. Rumors of the closed-door talks surfaced as Qualcomm reported cash revenue figures upwards of $17 billion in recent months.
The potential move by Qualcomm would follow several billionaire mergers in a booming yet struggling industry. It would also mean that the company gets to diversify its market scope, delving deeper into the development of semiconductor-based products other than smartphone chips.
Analysts seeing the market foresaw a possible move by Qualcomm given its increasing assets in recent times and the flow of the market. Early candidate lists all placed NXP Semiconductors at the top for the diversification and outreach possibilities it could bring to the American company.
A Qualcomm & NXP deal would be a merger within a merger
The semiconductors industry is not one to rest. The sector is one of the most financially lucrative and the market has been plagued with billionaire deals just last year and this one, as Qualcomm competitors seek the same thing the San Diego-based company is looking for in NXP: lower manufacturing prices, greater product scope, and increasing revenue.
Semiconductors are small pieces of solid materials that conduct electricity in different ways. They are highly alterable in the way they can conduct electricity, and that versatility makes them a major component in many tech products nowadays. Being a semiconductor manufacturer means having the majority of the tech industry within hand’s reach.
For this reason, the merger agreements just in the semiconductors sector surpassed the $100 billion mark. Intel acquired Altera for $17 billion, and Avago Technologies bought Broadcom in a $37 billion deal, and NXP themselves purchased Freescale Semiconductor for nearly $12 billion.
Now, a little over a year since the NXP-Freescale deal finished, the two companies are still in the process of wrapping up merger details. An acquisition move by Qualcomm would make the San Diego-based company an umbrella for both businesses, potentially making them start over in their rearrangement.
Qualcomm is currently worth $93 billion and holds enough spending capital to make a serious proposal to NXP Superconductors. It would greatly benefit Qualcomm since it could relocate overseas to reduce costs, allowing for a more lucrative business.
Furthermore, the two companies supply a significant portion of the smartphone market in the form of chips for both Android and Apple devices. Qualcomm could establish itself as somewhat of a monopolizing powerhouse to provide semiconductor solutions to the two powerful mobile operating systems in the world.
A merger could also represent significant advances in other fields, as the manufacturers venture further into creating semiconductors for new booming technologies like self-driving systems and devices conceived to shape the future of the Internet of Things.
Reports claim that, if Qualcomm and NXP Semiconductors indeed reach an agreement, the deal could go through in the next couple of months, perhaps as soon as before the end of the year.