Qualcomm + NXP = IoT Powerhouse

Coverage of the merger agreement between Qualcomm and NXP Semiconductors often focused on how the combination would yield the world’s largest supplier of chips for automotive electronics. Somewhat overlooked was its significance for the Internet of Things market.

NXP CEO Rick Clemmer said in a statement, “The combination of Qualcomm and NXP will bring together all technologies required to realize our vision of secure connections for the smarter world, combining advanced computing and ubiquitous connectivity with security and high-performance mixed-signal solutions, including microcontrollers. Jointly we will be able to provide more complete solutions which will allow us to further enhance our leadership positions, and expand the already strong partnerships with our broad customer base, especially in automotive, consumer, and industrial IoT and device-level security.”

Analyst Michael Walkley of Canaccord Genuity had this to say about the proposed merger: “We believe the NXP merger is a positive outcome for Qualcomm and NXP shareholders. We believe the combined business will generate significant earnings power and cash flow and develop into a clear industry leader in the mobile, IoT, and automotive semiconductor markets backed by an extremely strong combined Qualcomm, NXP (Philips) and Freescale (Motorola) IP portfolio.”

The merger statement pointed out Qualcomm/NXP’s strengths in IoT and security: “A leader in broad-based microcontrollers, secure identification, mobile transactions, payment cards and transit; strength in application processors and connectivity systems.”

This deal will take about a year to complete, if antitrust regulators and shareholders give their approval. Once the merger takes hold, look for an IoT powerhouse to emerge.