Why NXP Semiconductors Rocketed Higher Today, Defying the Chip Sector's Trend
On a down day for the broader semiconductor space, NXP Semiconductors (NASDAQ: NXPI) was up by 6.5% as of 2:07 p.m. ET Thursday. There wasn't much in the way of news coming out of the company, but a major tech publication reported that Korean tech conglomerate Samsung is interested in buying it.
The Asian Tech Press reported Thursday that Samsung is looking to acquire NXP specifically. While the article also cited other European chipmakers such as Infineon (OTC: IFNNF) and ARM Holdings as possible targets, NXP appears to be on the top of the list.
The thesis for the acquisition is two-fold. First, Samsung seems to acknowledge the attractiveness of chipmakers that serve the auto industry. Semiconductor content per vehicle is only rising with each new model year as automakers add more autonomous-driving and driver-assist features, and as more electric vehicles are sold. Last year, NXP received 50% of its revenue from the auto sector, and another 22% from the industrial and Internet of Things sector, which is also increasing the chip content in its products. Overall, NXP forecasts that these markets will grow by 9% to 14% annually over the next three years -- an attractive growth rate compared to what is expected from the semiconductor sector and the broader economy.
Source Fool.com