It is pretty funny how this was not kept secret, insider trading issues and all:
After a weekslong courtship, Qualcomm (QCOM) reportedly is set to marry NXP Semiconductors (NXPI).
San Diego-based Qualcomm has reached an agreement to acquire Dutch chipmaker NXP for about $110 a share in cash, CNBC reporter David Faber said Friday. Other details are still being negotiated, he said. The deal would value NXP at roughly $37 billion. Reuters also reported that a deal has been reached. By the closing bell Friday, Qualcomm shares added 0.9% to 67.93 on the stock market today. NXP stock, however, dropped 2.7% to 101.71.
Qualcomm Reportedly Seals Deal To Buy NXP Semiconductors | Stock News & Stock Market Analysis - IBD
View attachment 18431
While most of the mainstream media views the QCOM / NXP acquisition talks as a positive, to which I agree because I’m a big fan of disruption, let’s talk about the possible negatives of this mega acquisition.
First and foremost, NXP (NXPI $35B Market Cap) is an old school European analog semiconductor company that is still working on their mega acquisition of another old school Semiconductor company Freescale. QCOM on the other hand is the equivalent of a millennial semiconductor company. NXP has fabs all over the world (Hamburg, Germany, Manchester, United Kingdom, Chandler, Arizona and (2) in Austin, Texas, Nijmegen, Netherlands, and Singapore). QCOM ($99B Market Cap) on the other hand is the epitome of a fabless semiconductor company.
Really, the only thing QCOM and NXP have in common is debt and the combination of the two plus acquisition financing is a VERY large boat anchor ($30B?) for a once fabless semiconductor innovator.
A much better cultural fit for an NXP acquisition is another old school semiconductor company Texas Instruments (TXN $70B Market Cap), the #1 analog chip supplier with 15 fabs in 9 different countries. It is also interesting to note that current NXP CEO, Rick Clemmer, is a TI alum (former Senior Vice President and Semiconductor Group CFO). NXP Board Chairman Sir Peter Bonfield is also ex TI. The combination of TI and NXP would be a dominant $10B analog semiconductor company.
Analog Supplier Revenue Ranking (Semiconductor Intelligence, 2016 forecasted)
There are of course strong QCOM / NXP product and market synergies (mobile, IoT, and automotive) that can be discussed in more detail but one final thing to consider is, if not NXP, what acquisitions should QCOM be considering?
Xilinx (XLNX $13B Market Cap - Programmable Logic) and Mellanox (MLNX $2B Market Cap - Ethernet and InfiniBand) would be an easy place to start the discussion if QCOM is serious about the multi-billion dollar data center business. Millennial fabless semiconductor company NVIDIA (NVDA $36B Market Cap – HPC, GPU, AI, VR, Automotive) would be another potential acquisition if QCOM is set on a market expanding $30B+ mega acquisition.
My guess is that QCOM will chop up NXP and part it out. The fabs can go to TI or ON Semi etc.... The NXP employee LinkedIn profiles are already being updated and shopped around, absolutely.
After a weekslong courtship, Qualcomm (QCOM) reportedly is set to marry NXP Semiconductors (NXPI).
San Diego-based Qualcomm has reached an agreement to acquire Dutch chipmaker NXP for about $110 a share in cash, CNBC reporter David Faber said Friday. Other details are still being negotiated, he said. The deal would value NXP at roughly $37 billion. Reuters also reported that a deal has been reached. By the closing bell Friday, Qualcomm shares added 0.9% to 67.93 on the stock market today. NXP stock, however, dropped 2.7% to 101.71.
Qualcomm Reportedly Seals Deal To Buy NXP Semiconductors | Stock News & Stock Market Analysis - IBD
View attachment 18431
While most of the mainstream media views the QCOM / NXP acquisition talks as a positive, to which I agree because I’m a big fan of disruption, let’s talk about the possible negatives of this mega acquisition.
First and foremost, NXP (NXPI $35B Market Cap) is an old school European analog semiconductor company that is still working on their mega acquisition of another old school Semiconductor company Freescale. QCOM on the other hand is the equivalent of a millennial semiconductor company. NXP has fabs all over the world (Hamburg, Germany, Manchester, United Kingdom, Chandler, Arizona and (2) in Austin, Texas, Nijmegen, Netherlands, and Singapore). QCOM ($99B Market Cap) on the other hand is the epitome of a fabless semiconductor company.
Really, the only thing QCOM and NXP have in common is debt and the combination of the two plus acquisition financing is a VERY large boat anchor ($30B?) for a once fabless semiconductor innovator.
A much better cultural fit for an NXP acquisition is another old school semiconductor company Texas Instruments (TXN $70B Market Cap), the #1 analog chip supplier with 15 fabs in 9 different countries. It is also interesting to note that current NXP CEO, Rick Clemmer, is a TI alum (former Senior Vice President and Semiconductor Group CFO). NXP Board Chairman Sir Peter Bonfield is also ex TI. The combination of TI and NXP would be a dominant $10B analog semiconductor company.
Analog Supplier Revenue Ranking (Semiconductor Intelligence, 2016 forecasted)
- TI ($8.3B)
- ADI ($2,9B)
- Infineon ($2.7B)
- Skyworks ($2.6B)
- STMicro ($2.5B)
- Maxim ($2B)
- NXP ($2B)
- ON Semi ($1.4B)
- Renasas ($1.2B)
- Mediatek ($.8B)
There are of course strong QCOM / NXP product and market synergies (mobile, IoT, and automotive) that can be discussed in more detail but one final thing to consider is, if not NXP, what acquisitions should QCOM be considering?
Xilinx (XLNX $13B Market Cap - Programmable Logic) and Mellanox (MLNX $2B Market Cap - Ethernet and InfiniBand) would be an easy place to start the discussion if QCOM is serious about the multi-billion dollar data center business. Millennial fabless semiconductor company NVIDIA (NVDA $36B Market Cap – HPC, GPU, AI, VR, Automotive) would be another potential acquisition if QCOM is set on a market expanding $30B+ mega acquisition.
My guess is that QCOM will chop up NXP and part it out. The fabs can go to TI or ON Semi etc.... The NXP employee LinkedIn profiles are already being updated and shopped around, absolutely.
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