
Qualcomm to buy NXP for $38B in largest chip deal - ghosh
http://www.reuters.com/article/us-nxpsemiconductors-m-a-qualcomm-idUSKCN12R1AW
======
aylons
Everyone who maintains designs with NXP parts, please take notice: this is a
good time to download and keep all the documentation on these components.

Qualcomm's track record on releasing and delivering documentation is among the
worst in industry. If you are not a big buyer they vetted, they won't even
answer your emails or send you the NDA. And after NXP bought Freescale,
previously available documents went missing. So, all care must be taken.

~~~
Severian
Maybe this is a good project for ArchiveTeam. Looking at some google searches,
there looks to be about 100k PDFs to download from NXPs website. I'm sure the
majority is data sheets and application notes.

I'd be willing to help download this data if there was an collaborative
organized attempt to it.

~~~
joepie91_
Where would one find an index of these PDFs?

~~~
aceperry
NXP's docs are all over the place and they change when there are big changes
to the product lines.

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skrebbel
When NXP was spun out of Philips in 2006, everybody around the businesses were
a tad grumpy about it. Philips got paid a lot for NXP by the private equity
folks who took it out, who wrote it down as a loss on NXP's balance sheet.

So NXP started its independent life deeply in the red numbers. Doesn't seem
nice, does it? People were wondering whether the thing was just gonna be
chopped up, sold on, and half the people fired.

Instead, however, people had to be much more scrappy than before. The new
bosses weren't tech geeks but money sharks. Don't do things that don't have a
clear path to profit. Don't waste time. Don't tolerate people wasting their
time. Of course, this seems entirely obvious to all of HN, but anyone reading
this familiar with Philips culture knows that things aren't always that way.
Philips and NXP had (have) plenty of people who were rightfully referred to as
furniture. They were there for decades, same desk same chair, and nobody
really know what exactly they were doing. Somebody, somewhere, just kept
paying the salary.

NXP's new need to get back into the black numbers was truly transformative for
the company. Sure, it's still a bigcorp with all the quirks you'd expect, but
they came a long way.

I'd not have predicted a Freescale-level purchase 10 years ago, and I
definitely would not have predicted a $38B valuation. That's more than
Philips' current market cap ($26B) and NXP was spun out because it was a loss
leader that they couldn't turn around.

Well done, folks! As a fellow Eindhovener, I can't help but be a bit proud.
Too bad you didn't buy Qualcomm instead but you can't have it all I guess!

~~~
candiodari
I do wonder what this means for the wider industry. The fact that they finally
got bought means that other methods to grow revenue are failing (compared to,
say, 2-3 years ago), and now directly buying revenue has become the dominant
way to grow.

When reading financial textbooks they talk about how this happens in the last
stages of the business cycles, because it makes sense at those points :
economy steadily worsening, but only slightly (easy to mask on company
results, so companies appear attractive, but management knows they will be
significantly less so in a year's time or so), combined, especially today,
with the massive availability of cheap credit, and the idea that "rates will
be lower for longer" (history, of course, teaches us they won't).

The purpose here has to be to conquer more of the market by limiting options
and moving towards more consolidation.

------
riskable
I'm not so sure this should be allowed. If Qualcomm buys NXP that means
they'll own Freescale. That would reduce the number of mobile phone processor
manufacturers down to just Qualcomm, ST Micro, Nvidia, Apple, and Samsung.
Realistically this means it will be just Qualcomm and Samsung covering almost
the entire market of Android devices as the other manufacturer's chips are
more niche.

I suppose maybe Marvell could catch up and wind up in more phones but they're
already the bargain basement chip that winds up in cheap junk tablets. They'd
have a long way to go.

Intel could also make a sudden change of course and enter the market. Their
foray into tablets didn't work out well for them (I own several Intel Android
tablets) but at least their performance was on par with the competition at the
time.

~~~
joezydeco
I can't recall any recent design wins for NXP and/or Freescale in the
smartphone market.

NXP really had no Cortex-A solutions before acquiring Freescale, and
Freescale's i.MX series hasn't been in a phone for years, if at all. They did
have some early wins in mobile books, but not much more.

NXP is now targeting the i.MX line for automotive HMI/IVI use. The automotive-
class chip domain has always been a specialty of NXP (nee Freescale nee
Motorola Automotive nee Motorola Semiconductor)

~~~
protomok
I believe NXP has an NFC chip in a few different iPhone revs.

But I think NFC chipsets are noise in this acquisition, I think this is all
about QCOM missing the boat on automotive and buying their way into this
market via NXP.

The real loser here is Intel who really doesn't have a compelling automotive
story (aside from maybe Altera) and risks loosing to QCOM in handsets AND
automotive.

~~~
joezydeco
I agree that automotive is the play here.

Automotive isn't just about the application processor showing rear-camera
video and 3D maps, there are a lot of other pieces needed and Moto/Freescale
has had that market share for a very long time (at least with the American
automakers).

~~~
totalZero
QCOM is currently making most of its profits from 3G and 4G licensing, and
those royalties have been threatened by poor manufacturer cooperation and
protectionist regulatory actions in China and South Korea.

Buying NXPI (and its many technologies) gives QCOM an escape path to diversify
away from a maturing mobile handset market, with many foreign manufacturers in
countries with a different view on IP.

------
baq
qualcomm financials for reference:

    
    
    		+----------------------------+-------------+-------------+----------------------+
    		|                            | Fiscal 2015 | Fiscal 2014 | Year-OverYear Change |
    		+----------------------------+-------------+-------------+----------------------+
    		| Revenues                   | $25.3B      | $26.5B      | (5%)                 |
    		+----------------------------+-------------+-------------+----------------------+
    		| Operating income           | $5.8B       | $7.6B       | (23%)                |
    		+----------------------------+-------------+-------------+----------------------+
    		| Net income                 | $5.3B       | $8.0B       | (34%)                |
    		+----------------------------+-------------+-------------+----------------------+
    		| Diluted earnings per share | $3.22       | $4.65       | (31%)                |
    		+----------------------------+-------------+-------------+----------------------+
    		| Operating cash flow        | $5.5B       | $8.9B       | (38%)                |
    		+----------------------------+-------------+-------------+----------------------+
    

wow.

~~~
riskable
Wow is right. I had no idea they were doing so poorly!

Did some of their key patents expire or something? Or maybe we've hit "peak
phone/tablet"? Haha

~~~
globalgobble
I am so shocked you call this poorly. Well I am sure americans are used seeing
incredibly big numbers but for me this is hardly something I would call a
poorly results.

Gosh...the entire company has more money than some countries.

~~~
dom0
Year over year they lost practically a third of everything across the bank.

------
tomhoward
For those not aware:

NXP subsidiary Freescale was originally the semiconductor division of
Motorola, which developed the first ever commercial high-power transistor,
supplied much of the computing technology to the Apollo program, and developed
the MC6800 and MC68000 processors that helped spark the modern computing,
gaming and consumer electronics industries.

Quite a legacy Qualcomm is aquiring.

~~~
raverbashing
Freescale comes from Motorola

NXP was originally Philips

They merged on 2015

------
icebraining
_Qualcomm intends to fund the transaction with cash on hand and new debt._

As a layman, I'm surprised a company can simply raise more than a third of
their market cap. At this level, isn't debt almost an investment in the
company? If revenue falters, how can the lenders make sure they're made whole?

~~~
hga
The debt can be secured against the assets its buying, and if not explicitly
secured, debt holders are still pretty high on the pecking order in
bankruptcies.

A major reason to do it is that in the US debt is massive tax advantaged
compared to things like stock, and a major reason for entities to lend out
money for something like this is how poorly other less risky vehicles are
paying in this era of financial repression
([http://lexicon.ft.com/Term?term=financial-
repression](http://lexicon.ft.com/Term?term=financial-repression) or
[https://en.wikipedia.org/wiki/Financial_repression](https://en.wikipedia.org/wiki/Financial_repression)).

~~~
samfisher83
Their ip business is ridiculously profitable. Every cell phone sold whether
they make it or not they get a cut. So no one would have issues lending to
them.

~~~
hga
I have every expectation it's "ridiculously profitable" (they don't, for
example, reveal all the details of achieving good power consumption in their
patents), but it's clearly not a big enough part of the company to avoid the
terrible results baq highlighted in this comment:
[https://news.ycombinator.com/item?id=12804392](https://news.ycombinator.com/item?id=12804392)

And it's very common for a company with a great cash cow to bankrupt
themselves by going out of their area(s) of core competence ... which this
acquisition might be a doubling down on. I.e. isn't Qualcomm fabless, while
NXP has 8 sites according to this list:
[https://en.wikipedia.org/wiki/List_of_semiconductor_fabricat...](https://en.wikipedia.org/wiki/List_of_semiconductor_fabrication_plants)

~~~
manarth

      "they don't reveal all the details of achieving good power consumption in their patents"
    

In general, that would mean the feature is not patented: the choice is usually
between patent an invention (but it must be explicitly described), or keep it
secret (but if anyone is able to copy it, they're allowed to do so).

Patents are essentially an award of a short-term monopoly, as recompense for
_publicly_ disclosing an invention. If the invention is not sufficiently
explained, then it's merely a trade secret, and can be copied without
challenge.

------
bogomipz
The scale of these acquisitions is really incredible. Qualcomm is acquiring
huge company that itself recently acquired its own huge company.

How does management successfully integrate these merger of mergers?

------
dharma1
So it's going to be Qualcomm and Nvidia going head to head for automotive
chipset market?

~~~
robert_foss
Whomever spins smartphone/tablet ASICs will likely be a viable contender in
that race.

Don't forget about HiSilion, Rockchip, Allwinner, Spreadtrum, and MediaTek.

~~~
protomok
I'm just curious what happens to Freescale's i.MX product line...i.MX directly
competes in the automotive SOC space with QCOM.

~~~
digikata
I hope it survives, I've always liked the i.MX line.

------
Quequau
There is a sizable NXP facility in the city I live in. I'm really hopeful that
this winds up strengthening their business here, rather than resulting in yet
another closure.

------
swiley
This is some extremely disappointing news. Hopefully Qualcomm's awfulness
won't seep into freescale.

------
mtgx
Damn. I wish this was AMD instead. I guess they see IoT as a bigger/easier
opportunity than fighting Intel.

~~~
ableal
> fighting Intel

At the close of the 19th century, the Jules Verne novels occasionally featured
an 'arms race' for the biggest possible cannon.

Then in the 20th they just slapped smaller ordnance on tanks and planes.
Mobile platforms ...

~~~
mtgx
I understand, but there's still a whole lot of value Qualcomm could capture
going after Intel's much more profitable businesses, like the server market.
Going "up-market" as Clayton Christensen put it. If everything goes well with
IoT and this acquisition, Qualcomm may still do that, but not expecting it to
happen for another 10+ years now.

