It has been announced that the board of directors of Qualcomm Inc. and NXP Semiconductors NV has unanimously approved the acquisition of NXP by Qualcomm. This said strategy may be used to capitalize in the market of cars equipped with self-driving computers.
Chip Makers In The Automotive Industry
Qualcomm has posted on its website that the acquisition will allow them to expand into the automotive industry. Apparently, there's been a significant growth opportunity in that market. This is not a surprise since there's a number of automakers in the race of building fully autonomous cars.
According to The Wall Street Journal, the research IHS Markit estimates that an average new car has 616 chips. This is a huge increase from the 550 chips in 2013. The number of chips installed in a car's computer also reflects that of its price. Gartner Inc. reports that their value has risen from $250 in 2000 to $350 per vehicle this year.
Among the most vocal automaker with regards to self-driving cars is the Tesla Motors. Led by its CEO Elon Musk, the luxury vehicle maker wants to have fully autonomous cars on the road by the end of 2017. Tesla cars already have a semiautonomous system. The Autopilot driving assistance system could come into mind.
Tesla also revealed in their recent event that they have started shipping vehicles with hardware that will enable the planned full car autonomy.
Other automakers like Ford Motor Co. and BMW AG have mentioned that they will have self-driving cars in the next few years.
Qualcomm's $39 Billion Deal
Apparently, Qualcomm is not the only chip maker that realize the value of making it in the automotive industry. The Wall Street Journal also reports that the recent $39 billion deal for Qualcomm to buy NXP is akin to a previous deal back in July.
Analog Devices Inc. disclosed that auto applications had been a driving force in the deal to buy Linear Technology Corp. The cash-and-stock deal is valued at $14.8 billion.
NXP is also not a stranger in buying another semiconductor company. It acquired Freestyle Semiconductor Inc. in the $12 billion deal last year.
However, this pales to the Qualcomm and NXP deal. The said acquisition is arguably the biggest in the history of the semiconductor industry. It is also currently the second largest tech deal of all time.