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Pau Barrena / AFP through Getty Images
Just two weeks into the new year,
Qualcomm
he gave investors the latest sign that consolidation in the semiconductor industry is likely to continue well into 2021, announcing that it expects to acquire Nuvia for around $ 1.4 billion.
Qualcomm shares (ticker: QCOM) rallied on the news and closed up 1.9% to $ 157.42 in Wednesday trading.
Qualcomm ‘s rationale for the build is not immediately clear, however Barron’s cautiously optimistic about the agreement. Nuvia’s two-year competitive advantage lies in its processor designs, which are largely based on technology developed by Army Holdings. The company also has a talented record of chip operators, who are credited with helping such companies
Apple
(AAPL) and Google Alphabet (GOOGL) Google develops chips for different needs.
Nuvia has designed chips designed for cloud computing in an effort to challenge
Advanced Advanced Tools (AMD)
and
Intel
(INTC). Nuvia raised $ 240 million in their second round of funding in September, and planned to begin testing their chips this year. These days, designing and making even one line of the most advanced chips can cost hundreds of millions in research and development costs – perhaps where Qualcomm comes in.
However, Qualcomm stopped developing processors for the cloud two years ago, after a failed start. In the news, Qualcomm talked about Nuvia adding to its mobile processor technology, particularly power efficiency, which Nuvia Army-based processors are generally good at.
“Nuvia [central processing units] They are expected to be integrated across a broad package of Qualcomm Technologies products, powering smartphones, next-generation laptops, and digital cockpits, as well as Advanced Driver Support Systems, virtual network solutions and expanded infrastructure, ”Qualcomm said in the news.
Qualcomm’s Nucom acquisition comes amid chaos in the chip industry. In the industry’s largest deal, Nvidia made a $ 40 billion bid for Army in 2020, which is currently backed by SoftBank Group. Arm is a kind of slightly different chip company, designing the plans for semiconductors and then licensing them to companies like Qualcomm. Arm design powers most of the smartphones in the world.
Last year, Advanced Micro Devices announced their plan for construction
Xilinx
(XNLX) in a $ 35 billion all-stock deal.
Analog machines
(ADI) agreed to get the highest Integrated Outputs (MXIM) for $ 20 billion, and in the fall,
Marvell Technology
(MRVL) said it planned to buy Inphi optical network maker for $ 10 billion.
Qualcomm stock has accumulated over the past year, gaining over 70% as the adoption of 5G mobile technology has spread worldwide. The company has resolved years of legal trouble, including a U.S. Federal Trade Commission trust case, and was awaiting investor investment and a hostile takeover bid.
Write to Max A. Cherney at [email protected]