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Qualcomm (QCOM) Stock Still Gaining on NXP Semiconductors Buyout Rumors

Madeleine Johnson
Updated

On Friday, shares of telecommunications equipment company Qualcomm Inc. QCOM are still gaining, up around 2% in midday trading on reports the company is in talks to acquire NXP Semiconductors NV NXPI. NXPI stock is also up today, trading around 6.7% higher.

The Wall Street Journal originally reported the talks, saying a potential deal could close within the next two or three months, according to people familiar with the matter. If the acquisition comes through, the deal could cost over $30 billion.

Both companies’ stock jumped on the news, with the Netherlands-based NXPI soaring 17% and QCOM, which is located in San Diego, California, rose around 6.3%. Qualcomm now holds a market capitalization of $100 billion, while NXP Semiconductors is valued at more than $30 billion.

This acquisition signals another wave of consolidation within the chip-making industry, where over $200 billion worth of deals have occurred since the start of 2015. The WSJ notes that “Sales growth has faded at many of the once-burgeoning companies, as big chip markets such as those for smartphones and personal computers have ebbed.”

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NXP is known for building and supplying chips used in near-field communications, allowing phones to interact wirelessly with equipment like payment terminals—think Apple Pay or Android Pay. As Qualcomm designs and makes chips primarily for smartphones, an acquisition of NXP would be very beneficial for the company.

It would likely expand Qualcomm’s chip business to hundreds of different industries outside mobile devices, and the company could potentially become the number one chip supplier used in vehicles, “hoping to benefit as automobiles add greater computing power and self-driving models develop,” according to the WSJ.

Interested in the other top stories of the week? Listen to Zacks Friday Finish Line to catch up on the week’s financial and investment news.

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QUALCOMM INC (QCOM): Free Stock Analysis Report
 
NXP SEMICONDUCT (NXPI): Free Stock Analysis Report
 
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