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How Qualcomm-NXP Deal Could Change the Competitive Landscape

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Qualcomm-NXP deal improves the two companies’ competitive abilities 

In the previous part of the series, we saw that a merger of Qualcomm (QCOM) and NXP Semiconductors (NXPI) would create a leader in integrated semiconductor solutions. However, the acquisition doesn’t eliminate competition for Qualcomm or NXP since these two companies aren’t direct competitors.

But the merger would strengthen their ability to compete with the likes of Texas Instruments (TXN), Intel (INTC), STMicroelectronics (STM), Infineon Technologies, and Nvidia (NVDA).

Let’s take a look at the combined company’s competitive landscape.

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Automotive semiconductor market’s competitive landscape

Qualcomm is a leader in the mobile semiconductor market with a 39.0% share in the first half of 2016, according to Strategy Analytics. However, this isn’t the case in the automotive semiconductor market where there’s tough competition. Although NXP dominates with the largest share of 14.0%, Infineon Technologies and Renesas Electronics aren’t far behind.

All these companies are incumbents in the car infotainment and self-driving cars. Qualcomm is just a beginner. Qualcomm supplies Wi-Fi (wireless fidelity), Bluetooth and GPS (global positioning system)–based navigators for cars. But it’s a small player in the automotive market. The acquisition of NXP could make Qualcomm a leader in the safety, powertrain, car infotainment, car security access, and in-vehicle networks.

Competition in self-driving cars

The combined company would, however, have to compete in the self-driving cars space, where Nvidia is leading. Nvidia’s DRIVE PX2 platform will appear in Tesla’s (TSLA) Model S, Model X, and upcoming Model 3. This gives Nvidia an edge over NXP, whose BlueBox autonomous car platform is still being tested by automakers.

Other companies also supply key chips for autonomous cars. Infineon supplies chips for radar, Texas Instruments and STM supply chips for process camera images, and Renesas supplies chips for collision avoidance.

NXP is currently working with startup AutonomouStuff to develop software for self-driving vehicles. Qualcomm has developed the Snapdragon 602A infotainment chipset that will be featured in Audi’s 2017 cars. The acquisition of NXP would merge the efforts of the two companies and improve the self-driving technology.

Intel, the largest semiconductor company, is also ramping up its efforts to tap the opportunities of the connected world. With the breadth of its portfolio and its leadership position in several markets, it could create tough competition for Qualcomm. We’ll look at that in the next part of the series.

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