Qualcomm to buy NXP for $38 billion in biggest chip deal

Thu Oct 27, 2016 2:28pm EDT
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By Narottam Medhora and Supantha Mukherjee

(Reuters) - Smartphone chipmaker Qualcomm Inc (QCOM.O: Quote) agreed to buy NXP Semiconductors NV (NXPI.O: Quote) for about $38 billion in the biggest-ever deal in the semiconductor industry, making it the leading supplier to the fast-growing automotive chips market.

The acquisition will also help Qualcomm, which provides chips to Android smartphone makers and Apple Inc (AAPL.O: Quote), reduce its dependence on a cooling smartphone market.

With the deal, Qualcomm is taking a big bet on the so-called Internet of Things (IoT), which enables everyday objects such as fridges and cars to communicate with each other.

"The pace of innovation in automobile and IoT will increase dramatically and I think we look at it as a tremendous opportunity," Qualcomm Chief Executive Steven Mollenkopf said on a conference call.

By 2020, some 21 billion IoT devices will be in use worldwide, up from fewer than 5 billion last year, research firm Gartner has estimated.

Qualcomm sat out the transformative consolidation that has swept the chip industry recently.

The deal announced on Thursday tops Avago's $37 billion acquisition of Broadcom (AVGO.O: Quote) last year.

The equity value of Qualcomm's offer is $37.88 billion, according to Reuters calculations based on the company's fully diluted shares as of Oct. 2. Including debt, the deal is worth roughly $47 billion.   Continued...

One of many Qualcomm buildings is shown in San Diego, California, U.S. on November 3, 2015.   REUTERS/Mike Blake/File Photo