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Qualcomm Buys NXP

The transaction, scheduled to close at the end of 2017, could make Qualcomm a leader in RFID chip sales for IoT, cellular, automotive, transportation, payments and other applications.
By Claire Swedberg
Oct 27, 2016

Global telecommunications equipment and semiconductor company Qualcomm is acquiring integrated circuit manufacturer NXP Semiconductors. According to industry observers, the $47 billion acquisition—including debt—is the largest chip company transaction to date, and positions Qualcomm as the world's top seller of semiconductors.

By acquiring NXP, Qualcomm is poised to diversify its product offerings—including Near Field Communication (NFC) and radio frequency identification technologies—further into cellular, industrial and automotive microprocessors and controllers. The firm is also now able to offer full solutions.

"Our deep customer relationships and distribution channels are additive to one another, not duplicative," says a Qualcomm spokesperson. "Together, we will be able to deliver a broader portfolio of best-in-class technologies and platforms to our customers, while bringing new products to new markets, and at a more rapid pace."

NXP Semiconductors, the world's fifth largest semiconductor company, makes chips not only for RFID applications, but also for automotive and mobile devices—tablets and smartphones—as well as wearable devices. Based in Eindhoven, Netherlands, the firm employs 45,000 workers throughout more than 35 countries. The company sells a variety of RFID chips, including the NFC NTag, a low-frequency (LF) HiTag, the high-frequency (HF) 13.56 MHz iCode, the ultrahigh-frequency (UHF) RFID uCode and the uCode DNA. NXP's Mifare RFID chips, which comply with the ISO 14443 and NFC standards, are used in more than 40 different types of applications, including transit systems, contactless card payments, passports and access control, according to NXP. In addition, the company reports, 260 million Mifare readers and 10 billion Mifare ICs have been sold to date, accounting for more than 80 percent of all contactless credentials deployed worldwide.

The past few years have seen rapid growth for NXP. In 2015, the company acquired Freescale Semiconductor (another microprocessor and microcontroller manufacturer) for $12 billion, nearly doubling NXP's size and making it the world's largest automotive IC maker. Last quarter, it reported a 4.5 percent growth in earnings and averaged 1.04 percent growth over the previous year. The company expects its earnings growth to continue, and predicts that more than 30 billion network-connected devices and more than 40 billion devices with intelligence will be shipped in 2020.

Qualcomm has also been experiencing growth. The company's most recent quarterly earnings report was released in June 2016, when it indicated a revenue increase of 4 percent over the previous year.

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