Semiconductor Companies Post-Earnings Review

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Part 8
Semiconductor Companies Post-Earnings Review PART 8 OF 8

When Will Qualcomm’s Acquisition of NXP Semiconductors Close?

Closing the deal could delay until 2018

Qualcomm (QCOM) recently updated its proposed acquisition of NXP Semiconductors (NXPI), a maker of automotive chips. In the update, Qualcomm talked about when it expects to close the transaction and what it expects the transaction to cost it.

Qualcomm said that it was working to close the deal with NXP by the end of calendar 2017. But the company also said that the closing of the deal could delay until early 2018, largely due to pending regulatory approvals.

When Will Qualcomm’s Acquisition of NXP Semiconductors Close?

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Deal to cut deep into Qualcomm’s cash balance

Qualcomm intends to fund the acquisition of NXP using its cash balance as well as cash generated from a debt offering earlier this year. The company expects the transaction to result in the use of a large portion of its cash balance.

Qualcomm had a cash balance of $38.6 billion at the end of 4Q17, compared with $37.8 billion at the end of fiscal 3Q17 (June quarter).

Eye on automotive chips market

Qualcomm proposed to acquire NXP for $38 billion, making it one of the biggest deals in the semiconductor industry.

The acquisition is expected to increase Qualcomm’s exposure to the fast-growing automotive chips market. Intel (INTC), which closed its $15.3 billion acquisition of Mobileye a few months ago, is also vying for a share of the automotive chips market. Intel counts Alphabet’s (GOOGL) Waymo among its automotive partners.

Waymo is developing self-driving technology (QQQ). Boston Consulting Group, or BCG, predicts that the market for self-driving vehicles will be worth $77 billion by 2035.


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