Last week, Qualcomm has announced the termination of its long awaited acquisition deal with NXP Semiconductors. In accordance with the terms of the purchase agreement, Qualcomm River Holdings, a subsidiary of Qualcomm, paid a termination fee of $2 billion to NXP and has terminated its previously announced cash tender offer to acquire all of the outstanding shares of NXP.
The termination of the deal, which would have been the biggest semiconductor acquisition globally, has been largely attributed to the failure of both the companies in getting a secured Chinese regulatory approval, and becoming a victim of the on-going China-US trade spat. The decision is now likely to aggravate tensions between Washington and Beijing even further. China accounts for nearly two-thirds of Qualcomm’s revenue and thus getting an approval from the Chinese body was a requirement for the chip giant.
Qualcomm has also announced that its Board of Directors authorized a stock repurchase program of $30 billion, which replaces the Company's existing $10 billion stock repurchase authorization. Qualcomm expects to execute the majority of the stock repurchase program prior to the close of fiscal year 2019. By executing this stock repurchase program, and other previously announced strategic objectives, including its $1 billion cost plan and diversifying into new growth industries, the company remains well-positioned to drive significant accretion and value for stockholders.
According to Steve Mollenkopf, Chief Executive Officer, Qualcomm Incorporated, the company’s core strategy of driving Qualcomm technologies into higher growth industries remains unchanged. They will continue to focus on strong momentum in these growth industries with projected revenues of approximately $5 billion for fiscal year 2018, up greater than 70 percent from fiscal year 2016. Qualcomm believes that their technology leadership and disciplined execution will drive significant value creation for stockholders.
The company continues to achieve strong growth, accelerated by its expansion and momentum in the areas of IoT, Automotive, RFFE, Compute, and Networking:
- IoT – Qualcomm continues to lead in IoT, with more than $1 billion in revenue in fiscal year 2017. The Company has developed an indirect channel to reach more than 9,000 customers through third parties, including more than 25 global distributors.
- Automotive – It is poised to deliver robust connectivity solutions and leading intelligence capabilities for the connected car of tomorrow. As of July 2018, their backlog of awarded design wins is $5 billion, up from $3 billion in January 2018.
- RFFE – Their RFFE solution has secured design wins with top-tier smartphone manufacturers in addition to securing non-binding memorandums of understanding with a contract value of $2 billion with leading OEMs: Lenovo, OPPO, Vivo and Xiaomi.
- Advanced Compute – It is redefining the connected PC experience with launches from ASUS, HP and Lenovo, based on the Qualcomm Snapdragon 835 Mobile Platform.
- Networking – Qualcomm technology is driving the industry, leading in Home and Enterprise Wireless Networks and in Mesh Wi-Fi.
Qualcomm continues to lead in 5G and expects to see significant short- and long-term opportunities as the next wave of cellular technology dramatically transforms industries. These new opportunities are helping increase the size of Qualcomm's Serviceable Addressable Market (SAM) to $100 billion. Its leadership in the areas of advanced compute, connectivity and AI, the key technology building blocks of 5G, positions them extremely well to secure leadership positions in these new areas.
