There is much action in the world of electric conductors as NXP and Freescale, both semiconductor producers are planning on joining forces. Focused on creating smarter cars with smarter chip technology, both firms are leading the industry in creating cutting edge solutions. NXP will offer a cash and stock deal with a valuation of around $11.8 billion for Texas-based Freescale. After the deal, NXP will move from the number 5 company in the product category, to the number company. The resulting new firm will be valued somewhere over $40 billion.
Optimism surrounding the deal resulted in NXP and Freescales seeing their shares receive a bump in trading value, 16 and 11 percent respectively. The automotive chip industry was valued last year at $29.2 billion in 2014, a 9% increase from the year prior. Growth here can be from automakers need to provide more diverse offerings within cars cockpits, from hand free calling, to GPS, parallel parking and voice commands. Up to 100 chips can used in new cars to control brakes, displays, fuel injections, and rear-view cameras among much more. Projections for the future has the use of these types of chips will increase from car companies. Last year producers used approximately $334 per car made, with industry experts expecting that number to increase to $368 in 2018.
All roads seem to be pointing to cars becoming half combustion, half computer with the advances made recently in more automated driving and safety features. These types of chips will be at the center of the driving advancements for the foreseeable future. The combining companies are looking towards not only cars but everyday products as well, piggybacking on the Silicon Valley phrase, “The Internet of Things”. Striving to make the road a safer place will be the main focus for the new chip powerhouse as it seems they are a key part of the pioneering into the next generation for smart cars.
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