It's been rumored for some time that Qualcomm has been planning to acquire Netherlands-based NXP Semiconductors, but according to the latest report, it appears the deal could be near the final phases, with the announcement happening as early as next week. As the negotiations are still in the final phase, there is still the possibility that the deal could fall through due to the fact that there are still a number of fine details to sort out, but it's looking increasingly unlikely that this will happen.
If both companies sign, though, the deal could be announced on either October 26th or November 2nd, which are the dates for NXP's and Qualcomm's quarterly earning reports respectively and it would become the largest deal in the history of the semiconductor sector with a current negotiation price of between $110 and $120 per NXP share, leading to a company valuation of $34.7 billion, of which Qualcomm is reported to be offering up to 75% in cash, largely due to its large $30 billion cash reserve, and the other 25% in Qualcomm stock, though NXP is reportedly trying to increase the percentage of cash due to the fact that it prefers this option over stock. The acquisition of NXP is part of Qualcomm's efforts to broaden its customer base and reduce dependency on the smartphone market that is currently experiencing slow rates of growth by increasing its presence in the automotive sector which forms a large part of NXP's customer base.
In the past Qualcomm has opted to stick to the mobile market in order to avoid any major risks, but as its growth has slowed and problems with its chipsets, such as the overheating problems of the Snapdragon 810, lead to a loss in customers, it's no surprise the company has finally decided to look elsewhere for profits. In addition to this, the acquisition of NXP would bring a number of technologies to Qualcomm which could enable them to eventually manufacture their own chips instead of paying other companies to manufacture the chips for them. It remains to be seen if the final details of the deal can be sorted out, but what is for sure is that the deal will mean a number of changes at Qualcomm which could lead to a significant reduction in costs and an eventual increase in profits