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Qualcomm, NXP Discuss Merger, Say Reports

Deal could be largest in historic M&A rush
9/29/2016 06:45 PM EDT
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realjjj
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Re: ..
realjjj   9/30/2016 8:30:16 PM
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Come to think of it, how did they get to 27B?

NXP would be maybe 9.5B this year and 10B next year. Qualcomm might be at 15B this year considering the market, MTK's share gains and the loss of share at Apple. Next year could be tough too, MTK might have gotten their first win at Samsung, they are about to be certified on all 4 major US carriers and they have the Helio X30 on 10nm gunning for the high end.

rick merritt
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rick merritt   9/30/2016 7:43:48 PM
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Yes IC Insights # are IC revenues, not royalties or other stuff

realjjj
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realjjj   9/30/2016 7:40:00 PM
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Never said that IC Insights is wrong, just that the combined entity would have more revenue than the 27B mentioned.

Gondalf
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Gondalf   9/30/2016 6:32:39 PM
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IC Insights is right about this, the licensing revenue is not semiconductor revenue.

Samsung Electronics ranks a lot more than 40B, still its silicon revenue is only a portion of a very larger corporate revenue.

So the author is right, the new Qualcomm will be clearly below Samsung in silicon products.

Qualcomm is realizing its phone SOC market is vanishing after the deal between Samsung and Mediatek on low and medium level SOCs. I think at the end TSMC will be ahead the new Qualcomm in revenue. Another issue is money, i doubt 30b will be the final price, something like 40/50b sounds more likely and with 40b of debt with banks of NXP, this could mean a pile of 80/90 billions debt on the new Qualcomm. This consolidation looks very painful and a desperate move to give a new street to actual Qualcomm

realjjj
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realjjj   9/30/2016 4:23:25 PM
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That's likely one reason for such a buy. Hard to do IoT if you aren't used to work with 50k customers. Qualcomm would also increase their content in phones and that's one direction they were already following.


As for auto, it's hot right now but i think folks might get burned there. If regulators ok Level 5 autonomy in 2018-2020, car as a service starts ro ramp and a few operators quickly take over the bulk of the global market. The traditional players that would still try to sell cars would see volumes and ASPs collapsing. With CaaS the silicon content will be much higher than in the average car at first but with few players and each building few models, the market would be challenging for suppliers.

rick merritt
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Re: Qualcomm, NXP Similarities
rick merritt   9/30/2016 4:20:25 PM
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@HankWalker At the highest level, you are certainly right.

Strange to think about the possibility of going back to a soup-to-nuts giant like the  Motorola, Philips, NEC of old...back to the future ;-)

HankWalker
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Qualcomm, NXP Similarities
HankWalker   9/30/2016 3:19:15 PM
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I would argue that Qualcomm is in the design win business for all of its products, but NXP is also in the design win business for many of its important products (e.g. automotive, consumer). And both are focused on low power.

rick merritt
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rick merritt   9/30/2016 1:50:14 PM
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Your point about Q'comm's patent business highlights what different business models these two companes have.

Qualcomm sells relatively high ASP SoCs to a relatively small set of customers in a few markets. NXP sells relatively low ASP chips to a very broad and fragmented set of customers across just about every electronics market imaginable. Combining the two could createa very different company.

rick merritt
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rick merritt   9/29/2016 10:11:51 PM
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Thanks, realjjj  I did not know that.

realjjj
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realjjj   9/29/2016 7:28:00 PM
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Might be relevant to note that IC Insights doesn't count Qualcomm's licensing revenue so some 8B+ this year.

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