Qualcomm to buy NXP for $47 billion

SAN DIEGO _ Qualcomm said Thursday that it is buying NXP Semiconductors in a massive deal valued at $47 billion that aims to diversify its business in the wake of a slowing smartphone market.

The acquisition is believed to be the largest ever in the semiconductor industry, which is facing tepid growth in once strong markets such as smartphones and personal computers.

It clearly is the biggest deal ever for San Diego smartphone chipmaker Qualcomm, dwarfing its previous acquisitions of Atheros and CSR, which were in the $3 billion range.

Qualcomm will pay $110 a share for NXP, which is based in the Netherlands. The merger will transform Qualcomm from a leader in semiconductors used in smartphones into a company that builds chips for many markets.

NXP is a top supplier of semiconductor chips for payment processing, automotive computers, sensors, internet-of-things devices and a range of other fields.

The combined company is expected to have annual revenues of more than $30 billion.

But there are risks, starting with the price. At $47 billion, the deal uses all of Qualcomm's $30 billion in cash on its balance sheet _ much of which is offshore. The company will have to take on additional debt to fund the transaction.

NXP also has 45,000 employees, significantly more than Qualcomm's roughly 30,000 workers today. Many of these workers are in Europe, where labor laws make it difficult to trim headcount.

But the transaction also moves Qualcomm beyond the smartphone chip market, where growth has slowed and it's facing more competition from Intel, Samsung, MediaTek and others.

Qualcomm said the move grows its addressable markets by 40 percent to $138 billion by 2020.

"The NXP acquisition accelerates our strategy to extend our leading mobile technology into robust new opportunities, where we will be well positioned to lead by delivering integrated semiconductor solutions at scale," said Steve Mollenkopf, CEO of Qualcomm Incorporated. "By joining Qualcomm's leading SoC 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."