Qualcomm's $47 billion in cash for NXP into the world's top auto chip suppliers

October 27, qualcomm announced today that will be $110 per share in cash for grace wisdom pu semiconductor (NXP), the total amount of the deal is about $47 billion.This price includes the debt of pu.Through the acquisition, qualcomm plan to from mobile phones to expand our business to a car.
The deal would be in the semiconductor industry's largest deal, at the same time will also help qualcomm his chip business from cell phones to cars, more importantly, the deal could also make qualcomm auto chip industry's biggest supplier, after, qualcomm has been famous for designing smart phone chips.
The deal also let Avago technology company's $37 billion acquisition of rival broadcom trade as some, from the point of pure science and technology industry trade, qualcomm acquire grace of pu is the second largest trading in dell's $60 billion acquisition of EMC company.

Qualcomm it wisdom pu company, the purchase price at $110 a share, than the Wall Street journal reported on September 29, the grace of the merger talks related news wisdom pu was higher than 34%.However, if calculated according to $110 a share, qualcomm acquire grace wisdom pu company only need to pay $39 billion, however, and responsible for the debts of the grace wisdom pu, qualcomm's actual purchase prices to reach $47 billion.

Grace of pu in the fast-growing chip market position is very important on formation of the deal.Industry analysts say, investigate its reason, mainly because qualcomm to provide chips for driverless cars.After the merger of the company's annual revenue is expected to reach more than $30 billion.

The deal will make qualcomm, promote the further development of the chip manufacturing business, and expand the product line of qualcomm outside of the mobile devices, at the same time also can reduce the high dependence on the smart phone market.Although most of the revenue from qualcomm design and sale of wafers, but in fact, qualcomm is more than half of the profits to all authorized wireless handset makers from patent this business.
For $11.8 billion last year, grace wisdom pu company bought Freescale Semiconductor (Freescale Semiconductor, Inc.), and thus become one of the industry major chip manufacturers.Today, grace wisdom pu company have 7 factories in five countries and regions, these factories can be wafer into a chip.In addition to these factories, grace wisdom pu 7 also runs a packaging and testing of the infrastructure of the chip.

Qualcomm wireless chips with sentiment, commonly used in the apple and other Android smart phone.Qualcomm, however, is a company not line, the company's most chips are made by Taiwan's TSMC and seek for other chip design houses to build a chip generation to produce products of company.This fabless business model can make the chip designer to avoid the cost of running and build advanced factory, you know, the establishment of per plant and the cost of production to achieve more than $100, so as to ensure the production the most advanced chip.

Industry analysts and industry executives claim that management chip factories need to all kinds of management skills, it is much larger than the chip design.Some of these skills include: tracking production equipment using the length and performance, supervision, material supply chain management and production workers, etc.

Industry analysts, however, claim that grace wisdom pu company has more old factory, the factory may not be easily adapted to qualcomm production requirements.Grace wisdom pu company inherited more than 60 years ago some of the business.

Mature like grace wisdom pu factory, of course, to be able to maintain its leading position in the industry, so as to produce all kinds of chips, especially those that use analog rather than digital chip technology, the chip is mainly used in the radio.Market research firm VLSI analyst Dan hunter cut (Dan Hutcheson) once said, well production of pu high margins, part of the reason is that they started the production business for many years ago.

In fact, grace wisdom pu company in the near field communication chip area also has a leading position, the chip is mainly used in mobile payment business wisdom and open the car door related products.
Affected by the merger and acquisition news, qualcomm shares in pre-market trading today rose 2.9% to $70.20, grace and wisdom pu the former shares also rose 2.1% to $100.72.

Wednesday, grace wisdom pudong development for the company in 2016 in the third quarter earnings.Results showed that grace wisdom pu third-quarter profit was $91 million, and diluted earnings per share of $0.26, below the same period of last year's $361 million and diluted earnings per share of $1.49.But, um wisdom pu in the third quarter, excluding other projects, including operating profit has increased from $449 million a year earlier to $691 million.

Grace wisdom of pu in the third quarter revenue grew 62% to $2.47 billion, comply with the company expected.But not included in the revenue from freescale adjustment and other business, grace of pu in the third quarter revenue fell 3%.

Qualcomm is not yet released by the end of September this year the fourth quarter of fiscal 2016 earnings.However, in the end of June quarter, qualcomm profits of $1.4 billion, and diluted earnings per share of $0.97, higher than the same period of last year's $1.2 billion and diluted earnings per share of $0.73;While revenue grew 4% to $6 billion.

Qualcomm also said today, is expected to acquire grace wisdom pu trading after the end, will greatly increase the qualcomm adjusted profit.

Qualcomm will use the new offshore cash and debt to fund the deal.The deal will require regulatory approval, and meet other conditions, is expected to be completed by the end of 2017.At present, pu company has about 45000 employees.Qualcomm said in the last year in the annual report, the number of employees of about 33000.

Qualcomm it grace wisdom pu company will be in the semiconductor industry's latest deal.Since early 2015, the semiconductor industry merger of total scale has reached more than $2000.Qualcomm acquisition deal of pu company and comes at a time Of the semiconductor industry, once due to the large chip market booming company - such as those for smart phone and PC chip market sales growth is slowing.(compile/Jin Quan)

Qualcomm and intellectual pu adverse mediatek
Qualcomm determine m&a grace wisdom for pu for $47 billion, as a legal person believes that the two are based on TSMC client, for wafer foundry supply chain change is not big, but will open competition from rival mediatek distance, erect economies of scale with high walls, precipitated in the automotive, Internet, mobile payments emerging field layout.

Is the qualcomm release data, mergers and acquisitions after grace wisdom pu, not only the company full-year revenue to grow by leaps and bounds, in automotive and iot revenue alone can also directly up to $10.2 billion, $1.8 billion higher than current qualcomm is nearly 4.7 times, also can accelerate the vehicle, the Internet of things, the layout of the emerging areas such as pay action.

Grace wisdom pu qualcomm m&a will be completed by the end of next spring, when new qualcomm every up to $35 billion in annual sales, growth of forty percent, will squeeze the m&a broadcom anwar is high, the recapture global IC design industry.
For Duan Jing round foundry, after testing semiconductor supply chain, such as qualcomm, grace wisdom of pu is no fabs, and TSMC, ase and other factory already close cooperation, the legal person thinks, after m&a, effects on supply chain is not big, but for Taiwan is competitors, competition will be erected high barrier.

Mediatek, although after several years of merger and acquisition, this year revenue scale is less than 250 billion yuan;Qualcomm mergers and acquisitions by grace wisdom pu, will every up to $35 billion in annual sales, or nt $one million yuan level, mediatek is short time is difficult to break through the wall.