More Chips Fall: NXP Buys Freescale

NXP is acquiring onetime Motorola spinoff Freescale for $11.8 billion in the latest deal demonstrating the rapid pace of consolidation in the semiconductor market.

Netherlands-based NXP Semiconductors N.V. (Nasdaq: NXPI) is spinning the Freescale deal as a $40 billion merger, though Freescale Semiconductor Inc. shareholders are receiving $6.25 in cash and a fraction (0.3521) of an NXP share for each Freescale share they own. The deal comes after Freescale made a couple of consolidation moves of its own within the last year. The Austin, Texas, company acquired Zenverge in December and bought the former Mindspeed networking unit from MACOM last spring. (See Freescale Buys Zenverge and Freescale to Buy Mindspeed Unit from MACOM.)

Also, a frenetic pace for semiconductor sector consolidation has been established by companies such as Intel Corp. (Nasdaq: INTC), Avago Technologies Pte. , Qualcomm Inc. (Nasdaq: QCOM) and M/A-COM Technology Solutions Inc. , all of which have made multiple acquisitions in recent years as they have sought to diversify their chip technology arsenals while pursuing emerging markets such as connected cars, IoT and 100G optical networking, among others. (See Intel to Acquire Lantiq, Avago Eyes Enterprise Storage With Emulex Buy, Qualcomm Advances WiGig With Wilocity Buy and MACOM to Buy Mindspeed for $272M.)

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The NXP-Freescale deal has the automotive sector centered in its sights, but there are also implications for IoT in general, as well as security products, small cells and other networking gear. Freescale was spun off from Motorola nearly a decade ago and acquired by The Blackstone Group and other private equity firms for $17.6 billion. The company pursued a partial IPO in 2011, though more than 60% of it remains privately held.

— Dan O'Shea, Managing Editor, Light Reading