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Published: Sun, October 30, 2016
Tech | By Dwayne Harmon

Qualcomm Spends Big Money To Get In The Car (Chip) Business

Qualcomm Spends Big Money To Get In The Car (Chip) Business

Being involved more closely in IoT and automotive designs will help Qualcomm's mobile devices to integrate more smoothly into these applications. and obviously increase profit potential by expanding into new markets.

The biggest global acquisition of the year, AT&T's planned buy of media company Time Warner Inc for $85.4 billion, which is expected to face considerable regulatory scrutiny, will spur the second-largest U.S. bridge loan financing ever. But it's worth noting that Apple TV still remains in the "other" category on the company's income statement sheet, where Apple does not break down units or revenue of a few products, counting the Apple Watch.

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"Qualcomm doesn't just diversify its offerings". On completion of the deal, Qualcomm gets access to NXP's seven factories, located in the five countries that manufacture silicon chips, and seven facilities, that package and test chips before they are installed. The transaction is expected to complete by the end of 2017. It was further learned that Qualcomm will fund the purchase with debt and cash. Many in NXP are naturally not happy with the agreed upon price.

Gary Bradshaw, an investor with Hodges Capital Management, says, "When I'm driving my Toyota Camry hybrid, and I start veering into the other lane, and the auto starts beeping, all that's my NXP". Only time will tell if this merger will meet Qualcomm's lofty projections, but we can now say with 100% certainty that it is happening.

The combined company is expected to have annual revenues of more than $30 billion. The unit is named Qualcomm River Holdings B.V. Qualcomm plans to use the money to pay down the debt portion of the deal. Research firm BMO Capital remains Neutral on the deal while confirming its bullish view, having updated its price targets for the $106 billion company.

The company said it expects the deal to significantly add to adjusted earnings immediately upon its closing, and generate $500 million of cost savings annually within two years after the deal closes. NXP, including its acquisition of Freescale past year, accounted for about 11 percent of the total.

Qualcomm pioneered what the semiconductor industry calls the "fabless" business model. The Company operates as a semiconductor company and a long-standing supplier.

The 52 week high of NXP Semiconductors NV's shares is 107.54 whilst the 52 week low for the company's shares is 61.61.

"The combination of Qualcomm and NXP will bring together all technologies required to realise our vision of secure connections for the smarter world, combining advanced computing and ubiquitous connectivity with security and high performance mixed-signal solutions including micro controllers".

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