Qualcomm To Acquire NXP Semiconductors In Massive $47 Billion Deal As Company Expands Sales Channel For IoT

Qualcomm is acquiring NXP Semiconductors for $47 billion – the biggest deal yet in the chip industry – as the company looks to amp up its sales channels around the Internet of Things.

NXP Semiconductor's broad customer base and global network of distribution channel partners is essential for expanding Qualcomm's Internet of Things, automotive, security and networking footprint, Qualcomm CEO Steve Mollenkopf said in a statement.

’By joining Qualcomm’s leading SoC [System on Chip] capabilities and technology roadmap with NXP’s leading industry sales channels and positions in automotive, security and IoT, we will be even better positioned to empower customers and consumers to realize all the benefits of the intelligently connected world," said Mollenkopf.

[Related: Microsoft Supercharges Its Azure IoT Suite With New Upgrades, Capabilities For Partners]

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Eindhoven, Netherlands-based NXP Semiconductors specializes in developing chips for automotive systems including automotive radar, digital radios and transceivers. NXP also offers ARM-based, low-power microcontrollers for the IoT space, secure identification products, network processing and RF power products.

Qualcomm, meanwhile, has long been a leader in the mobile space, but the company is beginning to look beyond the mobile market to the Internet of Things – specifically through channel relationships.

In September, Qualcomm announced it is using a distributor for the first time – Arrow Electronics – to offer initial sales and support for new embedded Snapdragon chips – the Snapdragon 410E and Snapdragon 600E series – that are designed to reach a broader market and target low-power, scalable IoT applications.

Qualcomm said in a release that its acquisition of NXP will lead to "enhanced go-to market capabilities" through the combination of the two companies' ecosystem relationships and distribution channels, which will "enable the ability to deliver leading products and platforms at scale in mobile, automotive, IoT, industrial, security and networking." The combined companies are expected to have annual revenue of more than $30 billion, according to a Reuters story.

’Qualcomm's NXP acquisition … gets the company an instant footprint into more automotive and IoT,’ said Patrick Moorhead, president and principal Analyst of Moor Insights & Strategy, a leading tech analyst firm based in Austin, Texas. ’Qualcomm is a giant in smartphone and tablet SoCs, modems, and WiFi. NXP is a giant in low-power analog, NFC, Bluetooth, low-end IoT SoCs and automotive. The two make a good combination.’

The San Diego, Calif.-based company's acquisition of NXP marks the largest semiconductor deal ever, surpassing Avago Technologies' acquisition of Broadcom Corp. earlier this year for $37 billion.

Qualcomm is paying $110 per share for NXP's stock, which closed at $98.66 per share Wednesday. The equity value of Qualcomm's offer is worth about $38 billion, according to Reuters, which, combined with debt, puts the total value of the deal at $47 billion.

The deal is expected to close by the end of calendar 2017, according to Qualcomm.

The deal also marks the latest in a slew of consolidation and acquisitions in the semiconductor industry over the last few years, including Western Digital's purchase of SanDisk, Intel's acquisition of Altera, and NXP Semiconductors' purchase of Freescale Semiconductor.