Qualcomm is currently in talks to buy NXP Semiconductors in a deal that would cost around $30 billion, The Wall Street Journal reported. If the deal is to be closed, the source stated that it will more or less consolidate the semiconductor industry. However, the agreement is yet to be settled, so it is still possible that the companies won't pursue the acquisition.
Qualcomm And NXP Semiconductors Merger
According to the same source, the companies could finally settle to an agreement in no more than three months. However, a withdrawal is still a possibility as there are some people saying that Qualcomm is still continuously looking at other deal options.
If the deal is indeed coming to a favorable end, it would allow Qualcomm's business to be more diversified. It would also make the company a bigger supplier in the automotive industry, Reuters reported. Nevertheless, the Netherlands-based NXP Semiconductors and the San Diego-based Qualcomm have not made a comment regarding the said business discussion.
Qualcomm's Business In Mobile Phone Division
As per a Bloomberg report, the deal with NXP can help Qualcomm lower its reliance in the smartphone market. Apparently, shipments in the said market are slowing down as rivalry increases. The competition in the mobile market has become stiff primarily because of competition from Chinese and Taiwanese firms.
Qualcomm gets the large part of its profit from its processor sales and from the wireless patents that it licenses to the mobile division. According to an analyst, if the deal with NXP is pursued, Qualcomm will be able to create a roadmap for the coming decade while steering away from the mobile phone market and also while moving towards the growing potential in the automotive industry. According to one source, NXP Semiconductors has a high market value and could overall be a good deal for Qualcomm. The potential earnings are high, making the transaction become a worthy deal for the acquiring company.