(NASDAQ:QCOM) agreed to purchase NXP Semiconductors (NASDAQ:NXPI) for $38 billion, or $110 per share. Most big smartphone markets like the US, China, and India are nearly fully saturated and the world number one chip maker will be forced to look into new avenues for the coming decade. One problem: It's too late.
USA chipmaker Qualcomm said on Monday it was not looking to revive its abandoned $44 billion (roughly Rs. 3.1 lakh crores) acquisition of Dutch peer NXP Semiconductors NV, a day after the White House said China would reconsider clearing a deal if it was attempted again. It is important to note that China initially withholds the approval of the merger between the two chipmakers.
A recent study by Allied Market Research expects the global market for autonomous vehicles to be worth US$54.23 billion by 2019, increasing to US$556.67 billion by 2026 with a compound annual growth rate of about 40 per cent. The statement came last Saturday at a dinner during which President Trump also declared a temporary hold on a planned increase in tariffs. "Which is a big thing". Qualcomm cited China's cancellation of its regulatory application as one of the main reason why the deal did not push through.
The failure of the $44 billion merger deal was expensive for both sides: Qualcomm had to pay NXP a $2 billion breakup fee, and both Qualcomm and NXP launched huge share buybacks to mollify annoyed investors.
Regulators in eight countries approved the deal, including in the US and Europe. The merger was first announced in October 2016.
Qualcomm shares closed up 1.5 percent at $59.14 (about Rs. 4,200) in NY on Monday, while NXP shares ended up 2.75 percent at $85.67 (around Rs. 6,000). According to Bloomberg, China's Ministry of Commerce was concerned about Qualcomm's plans for patent licensing - but it is commonly supposed that the USA's threatened trade war with the country, in part down to a sales ban on ZTE products in the United States, was a major factor.