Qualcomm to Become Top Auto Chip Supplier with NXP Deal

San Diego-based Qualcomm Technologies Inc. has agreed to purchase NXP Semiconductors NV for $38 billion in what’s described as the largest semiconductor acquisition ever.

The deal, which is expected to close by year-end, will make Qualcomm the world’s largest supplier of automotive semiconductors. NXP seized that title following last year’s acquisition of rival Freescale Semiconductor Ltd. for nearly $12 billion.

Qualcomm derives most of its revenue from licensing patents and supplying chips for smartphones. The company has expanded into the auto industry in recent years, including wireless charging and connected vehicle technologies. But it has remained a relatively minor player, even after its 2014 purchase of telematics specialist CSR plc.

NXP boasts that it powers 14 of the 15 most-popular vehicle infotainment consoles. The company also is one of the top semiconductor suppliers for emerging advanced driver assistance systems and automotive cybersecurity technologies.

The combined operations are expected to generate annual sales of more than $30 billion. Qualcomm also expects to realize $500 million of cost savings per year by the end of the decade.