Qualcomm to Buy NXP for $39 Billion in Biggest Chip Deal
October 27 2016 - 8:10AM
Dow Jones News
Qualcomm Inc. agreed to buy NXP Semiconductors NV for $39
billion, adding the No. 1 supplier of automotive chips, a
fast-growing market, to the San Diego company best known for
designing smartphone chips.
The agreement represents the biggest semiconductor deal ever,
eclipsing Avago Technologies Ltd.'s pact to buy rival Broadcom
Corp. for $37 billion, and behind only Dell Inc.'s $60 billion
acquisition of EMC Corp. among pure tech deals.
The deal values NXP at $110 a share, which represents a 34%
premium over where NXP shares traded before The Wall Street Journal
reported on the talks Sept. 29.
NXP's position in the automotive-chip market was seen as a
motivation for the deal because analysts say Qualcomm wants to
supply its chips for self-driving cars. The combined company is
expected to have annual revenue of more than $30 billion.
NXP, which became a bigger manufacturer through the purchase
last year of Freescale Semiconductor, owns seven factories in five
countries that turn silicon wafers into chips. Besides those
plants, known as fabs, NXP operates seven facilities that package
and test chips before they are sold.
Qualcomm pioneered what the semiconductor industry calls the
"fabless" business model. The company's popular wireless chips,
used in the smartphones of Apple Inc. and others, are mostly
manufactured by Taiwan Semiconductor Manufacturing Co. and firms
that build products to order for chip designers.
Analysts and industry executives say running factories requires
a different set of management skills than designing chips. Those
include tracking the age and performance of manufacturing
equipment, overseeing a supply chain of materials and managing
production workers, who are represented by labor unions in some NXP
locations.
Write to George Stahl at george.stahl@wsj.com
(END) Dow Jones Newswires
October 27, 2016 07:55 ET (11:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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