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Qualcomm To Buy NXP Semiconductors in $47 Billion Deal (bloomberg.com)

Posted by msmash on from the big-shark,-small-shark dept.

Qualcomm, the largest maker of mobile-phone chips, will acquire NXP Semiconductors NV in a transaction valued at $47 billion, aiming to speed an expansion into new industries and reduce its dependence on the smartphone market. Bloomberg reports: San Diego-based Qualcomm agreed to pay $110 a share in cash for NXP, the biggest supplier of chips used in the automotive industry, or 11 percent more than Wednesday's close, the companies said in a statement Thursday. The deal will be funded with cash on hand as well as new debt. Chief Executive Officer Steve Mollenkopf is betting the deal, the largest in the chip industry's history, will accelerate his company's entry into the burgeoning market for electronics in cars. Eindhoven, Netherlands-based NXP is strong in that sector following its acquisition last year of Freescale Semiconductor Ltd. "It's no secret that we've been looking around," Mollenkopf said in an interview. "If you look at our growth strategy it's to grow into adjacent markets at the time that they are being disrupted by the technology of mobile."

40 comments

  1. Good idea. Andriod should diversify too by T.E.D. · · Score: 0

    The Qualcomm chips get absolutely crushed in any benchmark compared with the processors the iPhones are using. So Qualcomm and Android being tied at the hip isn't exactly doing Android any favors either.

    1. Re:Good idea. Andriod should diversify too by Anonymous Coward · · Score: 0

      This has more to do with the Chinese companies that are determined to break in to the cell modem market regardless of profit. It's the same reason Broadcom canned their cell modem division as well.

    2. Re:Good idea. Andriod should diversify too by Anonymous Coward · · Score: 0

      Let's do an apples-to-apples (pardon the pun) comparison by installing iOS on a Nexus and Android on an iPhone. Oh wait, Apple doesn't allow that?

    3. Re:Good idea. Andriod should diversify too by Aighearach · · Score: 1

      That's derpy as hell, there is no connection at all between the things called "Android" and "Qualcomm."

      If you're going to comment on that basis, you'd have to say words establishing a connection first.

      The reason this is bad for android is actually that NXP makes a lot of ARM chips that are important to embedded devices, including ones that run... android! That's what makes your comment extra-derpy. Truly a sad day for android, but no, not because there is some "connection" between android and qualcomm but because qualcomm chips are not usable in this revolution of design accessibility.

    4. Re:Good idea. Andriod should diversify too by Anonymous Coward · · Score: 0

      From a purely hardware perspective the Snapdragons of the same model year are better than the A* chips of the same year. The Snapdragon 821 is a better chip than the A10. The problem is Android is a bloated POS and runs worse than iOS. Its a minor miracle the benchmarks are as close as they are.

      That said, Samsung has a new 10nm process that threatens to leave Qualcomm in the dust in 2017-2018....

    5. Re:Good idea. Andriod should diversify too by T.E.D. · · Score: 1

      That's derpy as hell, there is no connection at all between the things called "Android" and "Qualcomm."

      OK, I'll bite on this. What new Android mobile phones can I buy that don't run on Qualcomm hardware?

    6. Re: Good idea. Andriod should diversify too by Anonymous Coward · · Score: 0

      Galaxy S7, all non-US versions.

    7. Re: Good idea. Andriod should diversify too by Aighearach · · Score: 1

      Nice one TED, you inserted extra words!

      Just take out the extra words, go to newegg or any place that sells android-based devices, and search for "android" instead of "phone" and you'll see that in fact very few android devices have qualcomm anything in them. They do however quite often have CPUs from NXP.

      The whole idea of a cell phone chip getting "crushed" in a benchmark is hilarious; newsflash, your cell phone is constrained by other things the IC it uses. As a tablet, lets be honest, qualcomm doesn't stuff doesn't lead the benchmarks, and power trades off for battery life. Qualcomm doesn't have a lock on a smaller IC tech than anybody else, so I know already they don't have better benchmarks even if they made a set of tradeoffs that result in their preferred benchmark results that sync with their marketing.

    8. Re: Good idea. Andriod should diversify too by T.E.D. · · Score: 1

      Nice one TED, you inserted extra words!

      Yes, since you clearly were confused as to what I was getting at. Some of us call that a "clarification". I was indeed trying to talk about Android smartphones. You know, the thing I like to buy every 2 years or so when the old one goes obsolete. If those two words weren't enough of a difference, I'm quite capable of producing more.

      Just take out the extra words, go to newegg or any place that sells android-based devices, and search for "android" instead of "phone"

      Why would I do that, when the only Android devices I'm interested in buying as a consumer are smart phones?

    9. Re: Good idea. Andriod should diversify too by T.E.D. · · Score: 1

      What new Android mobile phones can I buy that don't run on Qualcomm hardware?

      Galaxy S7, all non-US versions.

      I live in the US, contracted to a US carrier. So for all practical purposes, no I can't buy that.

    10. Re: Good idea. Andriod should diversify too by Aighearach · · Score: 1

      I don't care what you thought you were "getting at," what I responded to was what you said, because that is what you said.

      If what you said didn't mean what you wanted to "get at," maybe try harder?

  2. Autonomous Driving by madwheel · · Score: 1

    I wonder if this will help them better compete with Nvidia when it comes to making cars smarter. We could certainly use more competition, but I hope Qualcomm can get over their internal staff issues before they get themselves more involved in another industry.

  3. NXP = NFC by darkain · · Score: 4, Informative

    NXP is also synonymous with NFC technology. This is entirely missed in both the summary and TFA it appears.

    1. Re:NXP = NFC by Anonymous Coward · · Score: 0

      Also synonymous with inventing networks on chip that nobody wants to use.

    2. Re:NXP = NFC by Chris+Mattern · · Score: 3, Funny

      NXP is also synonymous with NFC technology

      So who specializes in AFC technology?

    3. Re:NXP = NFC by Anonymous Coward · · Score: 0

      The NBA. Duh.

    4. Re:NXP = NFC by Anonymous Coward · · Score: 1

      Exactly. NXP is behind the infamous Mifare Classic NFC chips and the more recent and very popular DESFire EV1 chips.

    5. Re: NXP = NFC by Nocturna81 · · Score: 1

      Having spoke to someone working at NXP during that debacle it seemed that NXP did warn them that this chip was not fit for purpose and they had better, but more expensive, solutions. We all know what happened with that advice...

  4. ignorant idiot by Anonymous Coward · · Score: 0

    NXP is also synonymous with NFC technology.

    ST Microelectronics would prove you WRONG

    http://www.st.com/en/applications/connectivity/near-field-communication-nfc.html

    STMicroelectronics is today the first and only silicon solution supplier on the market capable of providing a global offer of products and solutions for NFC enablement.

    but I'm sure your drugs are better

  5. Eudora by hackel · · Score: 1

    Am I the only one who can never imagine Qualcomm as anything but the developer of Eudora? It just seems to bizarre to me that this company is now developing computer chips and all this other advanced stuff. Quite a big leap from a proprietary email client. (Yes, I've read about them, and know technically hat their history actually is, but that doesn't change my impression!)

  6. Competition of chip vendors is getting thin by Anonymous Coward · · Score: 0

    Does it seems like the semiconductor market is getting to where there is less and less competition?

    This is not good for electronic OEM's.

    1. Re:Competition of chip vendors is getting thin by Aighearach · · Score: 1

      Sortof, but the Chinese generics are crushing most them in profits. The market forces that are driving the mergers are the same ones that are making things so much better for small and medium sized OEMs. Only the largest OEMs have anything to worry about. You could actually end up with a situation where the largest batch sizes actually more per unit than regular-large quantities! That could happen when there are only a couple mega-suppliers left that can even fill the big orders, but there are a zillion factories offering regular sized batches. You can only get quantity discounts up to the max output of a single supplier; then past that you're paying extra for somebody to scrape together the different batches. And if you need matched parts, then you're paying high prices.

      Losing NXP will be a big hit for the small designer, because they sell lots of great chips with quality, easily accessible datasheets. Qualcomm sells expensive chips to exclusive buyers and they protect datasheets as if it is their private laundry. But the overall effects of the mergers might be good for the little guy, mostly because it is a battle that the medium-sized Chinese factories win in the end; and they sell to anybody. And they'll include the datasheet when they have it.

  7. Semiconductor market shrinking by unixisc · · Score: 4, Interesting

    So the number of semiconductor companies continues to shrink. I noticed some time back how Intel's Numonyx has been a part of Micron, AMD's Spansion has been a part of Cypress, and now I read that Freescale had been gobbled by NXP, which now is eaten by Qualcomm.

    All these companies might as well formally become design arms of real fabs, like TSMC, GSMC, Samsung, et al

    1. Re:Semiconductor market shrinking by Anonymous Coward · · Score: 1

      With that logic TSMC, GSMC, and Samsung should all bend the knee to the semiconductor equipment manufactures like ASML who make every piece of equipment on their production lines. ASML being another Dutch company....

    2. Re:Semiconductor market shrinking by Anonymous Coward · · Score: 0

      Its now $10+ billion to setup a next gen fab. Once upon a time a fab was a $100 million investment. With each new generation profit per marginal unit drops and the fixed capital cost go up 20-30% . The next gen fabs will cost $12-13 billion each. And you have countries like China that are only to happy to subsidize loss leaders indefinitely in this sector. It's about the worst business in the world to be in right now. I'm amazed there aren't more mergers. I even more amazed any of this stuff still exists in the US given the Chinese and Korean competition.

    3. Re:Semiconductor market shrinking by unixisc · · Score: 1

      I thought the only US fabs that are still there are the legendary ones made by Intel. But honestly, making newer fabs is now pointless. The reason newer fabs were made, or newer equipment was purchased was to enable process shrinks, or cost down versions of existing chips. But now, you do not get cost reductions when shrinking: in fact, you could well see costs increase. Also, not only are we getting close to atomic level shrinks, but also, we are getting to a point where your pad limitations automatically put a minimum area to your die. Which is why the last few fabs of 100nm or thereabouts are just right: you won't get any cheaper beyond them

    4. Re:Semiconductor market shrinking by BarneyGuarder · · Score: 2

      It's not really shrinking, it is maturing. Over the last few decades the semiconductor market has moved from a relatively large number of smaller disruptive companies to a relatively small number of larger streamlined companies. As an example, consider how many CPU architectures there were in the '80s and '90s. You had x86, 680x0, MIPS, Alpha, SPARC, PA-RISC, just to name a few. Now there is x86 (the modern version of it) and ARM.

      You can also look at car companies in the first half of the 20th century. Lincoln, Cadillac, Oldsmobile, Dodge, et. al. were independent car companies when cars were still new. They were acquired by what became the "Big Three" US automakers before the merger of Dialmer-Chrysler. Maybe electric vehicles will be enough of a disruptive market to foster more auto companies.

      The large development costs and relatively stable products of mature markets favor large, streamlined companies that can benefit from economies of scale. The fast changing nature of new markets favor small agile companies that can be disruptive. We are in the later stages of the maturation of the semiconductor industry.

    5. Re:Semiconductor market shrinking by Anonymous Coward · · Score: 1

      I thought the only US fabs that are still there are the legendary ones made by Intel.

      Hardly. There are dozens of US domestic fabs that aren't part of Intel. A lot of the older ones specialize in the RF and power control ICs that are used in phones and all kinds of other rechargeable gear, because they require higher voltages and special features not supported by state-of-the-art fabs. There will always be at least one because chips for those F35's and such have to come from ... somewhere.
      https://en.wikipedia.org/wiki/List_of_semiconductor_fabrication_plants

    6. Re:Semiconductor market shrinking by Jfetjunky · · Score: 1

      On Semiconductor also bought Fairchild. Analog devices also has approval from SEC to buy Linear Technologies. Texas Instruments bought National Semiconductor some time ago.

      Working in the industry it's been interesting to see what happens with all these acquisitions. It's NOT fun, however, when someone buys the company who happens to make a very unique part, then cans that whole product line, forcing you to redesign the product (which may or may not have a replacement part).

    7. Re:Semiconductor market shrinking by thegarbz · · Score: 2

      I see another trend. The small companies with very helpful engineering teams and fantastic support are being gobbled up by companies who specialise in hiding behind NDAs.

      I wonder if this is sustainable.

    8. Re:Semiconductor market shrinking by Anonymous Coward · · Score: 0

      Are you taking a "one China" position, or do you differentiate Taiwan from the mainland? :-)

      We all know about TSMC of course, but mainland China is the biggest importer of semiconductors in the world. They might own the cheap consumer electronics industry, but most of the chips come from abroad.
      They've been trying to build up capacity for years. Government is definitely subsidizing the investments and they're growing fast, but their capacity is still relatively tiny. The current domestic production isn't "next gen" by any means. It's mostly N-1 and N-2 technology. They've announced some partnerships in the last few years, but it's going to be a long time before they're ready to compete in the high end. North American manufacturing isn't going to disappear anytime soon.

    9. Re:Semiconductor market shrinking by gweihir · · Score: 1

      Same here. I think this is a very bad trend, but unfortunately one where it will take some time to become obvious how bad.

      --
      Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
    10. Re:Semiconductor market shrinking by Anonymous Coward · · Score: 0

      Don't forget Microchip's recent acquisition of Atmel.

    11. Re:Semiconductor market shrinking by unixisc · · Score: 1

      They bought Atmel? They had bought up the standard flash memory portion of SST previously: the remnants of that company now makes niche chips under the 'Greenliant' moniker

    12. Re:Semiconductor market shrinking by Anonymous Coward · · Score: 0

      Analog buying LT is really sad. There are some fields where they were the only real competitors. I use both depending on requirements, but I'm afraid some will disappear, hopefully not the LT1[01]28, nor Linear's excellent voltage references.

  8. The Freescale part is interesting by Anonymous Coward · · Score: 1

    Famous US electronics firm managed straight into the ground by MBA holders with golden parachutes.

    Motorola was a great US firm that created the 6800 series 8-bit MCUs that were in TONS of stuff. When the time came to go 16-bit, they leap-frogged and created the fantastic 32-bit 68K series with a wonderful instruction set that treated the entire address space the same and all data registers the same. Intel monkeyed with their 8080 to create the oddball 8086 and 8088 which became the base of the PC and all the freakish instruction set and address mapping garbage we still deal with today. There was a time when the 68K family was in every Mac and in many workstations.

    With the rise of the cell phone, management at Motorola got all googly-eyed over profits on the Razor and lost site of the "boring" chip business. They spun-off the microprocessors to a new brand called "Freescale" and the rest to a brand called "On Semiconductor". These geniuses then missed the whole smartphone era and the Motorola brand dissolved. The MBA types undoubtabley parachuted out with bonuses as they always do, leaving the once-proud and mighty Motorola brand as just a small blob of IP and logos being bought and sold by the likes of Google.

    While OnSemi appears to be still going, Freescale was recently bought by NXP, which was odd if anything other than market consolidation, since they had a huge overlap in their products. This now appears to have been part of a larger move though if NXP is being sold so soon after buying Freescale. This is reminiscent of Boeing who bought McDonnel-Douglas which had in turn gobbled-up others.

    This is a sign of a bad market and/or bad economy. When companies spend their money gobbling each other up in order to tell their share holders that they are experiencing growth, as opposed to investing in new products, services, and markets, it's a sign that they are having trouble in a weak economy. Chains of such mergers are really bad, indicating a more broad economic problem rather than just bad management at one or two firms.

    1. Re:The Freescale part is interesting by unixisc · · Score: 1

      IMO, Motorola mismanaged the PowerPC, which at one time looked like it could shoot up up front. They should have taken more ownership of IBM's OS/2, and participated in propping Be, which started off as a PowerPC box. Also, when Apple wanted more power saving CPUs, Motorola should have made that their first priority. Instead, they let that market go to Intel. Imagine if today's MBPs, Mac Pros and iPhones had all been based on PowerPC!

      Instead, by just becoming an also ran ARM vendor, Freescale pretty much wrote off their chances