George Stahl

Qualcomm agreed to buy NXP Semiconductors NV for $39 billion, adding the top supplier of automotive chips to the San Diego (CA) company best known for designing smartphone chips. The agreement represents the biggest semiconductor deal ever, eclipsing Avago Technologies Ltd.’s pact to buy rival Broadcom Corp. for $37 billion, and behind only Dell Inc.’s $60 billion acquisition of EMC Corp. among pure tech deals. The deal values NXP at $110 a share, which represents a 34% premium over where NXP shares traded before The Wall Street Journal reported on the talks Sept. 29. Including debt, the deal is worth $47 billion.

NXP’s position in the fast-growing automotive-chip market was seen as a motivation for the deal because analysts say Qualcomm wants to supply its chips for self-driving cars. The combined company is expected to have annual revenue of more than $30 billion. The deal will reshape Qualcomm, pushing the company deeper into the process of making chips and expanding its product line beyond mobile devices. While Qualcomm derives most of its revenue from designing and selling chips, the company earns more than half of its profits from licensing its wireless patents to nearly all makers of mobile phones. NXP, which became a bigger manufacturer through the purchase in 2015 of Freescale Semiconductor, owns seven factories in five countries that turn silicon wafers into chips. Besides those plants, known as fabs, NXP operates seven facilities that package and test chips before they are sold.