What APDCC is Reading #1

Qualcomm, a San Diego based semiconductor giant, founded in 1985 has been one of the world’s top 10 chip manufacturers. The company’s primary revenue is through the design and sale of semiconductor chips for tracking devices, mobile and satellite phones, modems, etc. The other major revenue stream for Qualcomm is through the licensing of their patents, which amounted to about $1Billion in 2015. The 724 patents owned by Qualcomm makes it the leader in the Internet of Things, the internetworking of numerous devices and sensors to enable them to collect and exchange data. 

In late 2015, a decline in sales resulted in Qualcomm laying off about 15% of its 31,000 workforce to offset a decrease in revenue. However, in October 2016, Qualcomm has announced its decision to buy NXP, a dutch semiconductor manufacturer, for $39 Billion, its largest acquisition till date. The final amount including debt for the loan to buy NXP would amount to about $47 Billion.

NXP is the 5th largest manufacturer of non-memory chips in the world and a world leader in the automotive and secure identity sector. The main strategy for this move from Qualcomm comes from its vision on “cars becoming the next smartphone”. This acquisition will help it to move away from the smartphone market, which is undergoing saturation and enable it to venture into new territories. The biggest gain for Qualcomm according to analysts is the potential for Qualcomm to become the pioneer in developing the Internet of Things, a future where most electronic devices are interconnected!

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