Smartphone chip giant Qualcomm says to buy Dutch semiconductor firm NXP for $47 billion. After the acquisition, Qualcomm gets the opportunity becoming a major chip player in the IoT market.
“By joining Qualcomm’s leading SoC capabilities and technology roadmap with NXP’s leading industry sales channels and positions in automotive, security and IoT, we will be even better positioned to empower customers and consumers to realize all the benefits of the intelligently connected world,” said Steve Mollenkopf, the CEO of Qualcomm, in an official statement.
The purchase reveals Qualcomm’s reaction to the slowing growth in demand at the smartphone market. Smartphone sector has produced the company’s major revenue, however, it is getting saturated. The company has also tried to enter IoT market before, but there’s not a big return on investment to be seen yet.
NXP, on the other hand, has grown its semiconductor business in different sectors from Qualcomm, including automotive, broad-based microcontrollers, secure identification, network processing, RF power and Internet of Things.
Smart Home sector, for instance NXP has also launched its smart home development kit back in CES 2016. The company’s smart home solution provides production-ready modules and reference designs for smart lighting, smoke detection, motion sensing and home gateways. One of the connectivity options of the home kit, the Bluetooth Low Energy chip QN9080, is manufactured by NXP.
The combination of Qualcomm plus NXP is expected to become the market leader in following business sectors – mobile, automotive, IoT and networking. And the biggest change that NXP brings to Qualcomm is to grow from a small player to the market leader in the IoT sector.
NXP now leads the IoT market with its broad-based MCUs, secure ID, payment cards and transit elements. Combined with Qualcomm’s connectivity systems and advanced computing abilities, the deal allows Qualcomm to jump another level in the IoT market.
The annual revenue of Qualcomm now is $25 billion while NXP produces $10 billion per year. As Qualcomm predicts, the combined company is expected to have $138 billion at annual revenue by 2020.
The acquisition is said to be the biggest deal in the semiconductor history.