Qualcomm's $38B bid for NXP faces EU scrutiny

Qualcomm's proposed acquisition of NXP is being investigated by European antitrust authorities

Qualcomm’s bid to acquire rival NXP Semiconductors for $38 billion is coming under scrutiny across the Atlantic.

Antitrust authorities from the European Union have opened “an in-depth investigation” into the proposed takeover, listing “a raft of concerns” about the potential for the combined company to raise prices and elbow competitors out of the market, Reuters reported.

The company could also bundle its chips, the European Commission reportedly noted, closing off the market for companies looking to sell baseband chipsets and NFC chips.

“We use our electronic devices every day—mobile phones or tablets,” Commissioner Margrethe Vestager said in a prepared statement. “As semiconductors are used in practically every electronic device, we are dependent on them in those devices. With this investigation, we want to ensure that consumers will continue to benefit from secure and innovative products at competitive prices.”

Qualcomm is the third-largest chip vendor in the world in terms of revenue, according to IHS. NXP is the seventh-largest.

A Qualcomm spokesperson said the company is confident it can address the EC's concerns and continues to expect the transaction to close by the end of the year.

"This acquisition is complementary, and driven by the belief that the combined efforts of the two companies will produce even greater innovation than they would alone," the spokesperson said via email. "This significant investment by Qualcomm will help our industry partners in the automotive, IoT and security sectors advance their digital transformation and further the digitization of industries worldwide."

NXP is based in Eindhoven in the Netherlands, and specializes in chips for automotive systems, ID cards and transit cards. It was founded more than 60 years ago, and became the number one supplier of chips used in cars after it acquired Freescale.

The semiconductor market has consolidated significantly over the last few years as chip vendors struggled with slowing worldwide growth of the smartphone segment. But the proposed tie-up would alter the chip landscape significantly: It would expand Qualcomm’s chip business from dozens of major product lines to hundreds, and would instantly make the company the premier supplier of chips used in cars.

The European Commission has until Oct. 17 to issue a ruling on the proposed deal.

This story was updated June 12 to add Qualcomm's comments.