Microprocessor maker Qualcomm is spending its way out of a stagnating mobile phone industry, offering to buy NXP Semiconductors, a company with a strong position in automotive chips, for more than $37 billion.
Qualcomm formalized its offer Thursday, barely a month after rumors began circulating that a deal was in the offing.
NXP has only just digested its own multibillion acquisition, of Freescale Semiconductor, which closed in December 2015.
The combination of Qualcomm and NXP will have annual revenue of around $35 billion, Qualcomm said. That's still well behind the $55 billion Intel reported for its full fiscal year 2015.
NXP sells a lot of automotive chips -- they're found in many cars' infotainment systems -- but also microcontrollers, secure identification chips, network processors and radio-frequency power amplifiers.
The deal will allow Qualcomm to strengthen its position in markets such as connected cars and the internet of things, CEO Steve Mollenkopf said, announcing the deal.
That's important as the mobile phone market, from which the company makes a large part of its revenue, is slowing. Gartner expects phone sales to shrink this year, and to remain flat for the next two years, pushing Qualcomm to look for growth elsewhere.
It's not just about new markets, though. Qualcomm expects to find $500 million in annual cost savings by merging the two companies. It will spend some of its offshore cash pile on the deal, avoiding U.S. taxes that would be due if it repatriated the money.
Qualcomm expects to close the $110-per-share deal by the end of next year, subject to regulatory approval.