Dutch semiconductor manufacturer NXP Semiconductors NV is selling its RF Power unit to Chinese state-owned investment firm Jianguang Asset Management Co. for US$1.8 billion.
The deal is intended to secure regulatory approval for its US$11.8 billion acquisition of Freescale Semiconductor Ltd., the Wall Street Journal reported.
The merger would create the world’s fourth-largest smart chip company worth more than US$30 billion, NXP said, adding that it is expected to be completed in the second half of this year.
Since both Freescale and NXP have dominant market shares in RF Power transistors, with a combined market share of 80-90 percent, one of the companies would have to sell their RF Power business for the merger to obtain clearance from regulators, the newspaper said.
NXP chief executive Richard Clemmer said Jianguang’s ability to buy RF Power in the quickest time possible was a key factor to go ahead with the sale.
Under the agreement with the unit of China state-owned investment firm JIC Capital, about 2,000 NXP employees in the RF Power business will be transferred to an independent company incorporated in the Netherlands, which will be acquired by Jianguang Asset Management, or JAC Capital, after the deal, the Dutch company said.
All patents and intellectual property associated with RF Power will be transferred in the sale, as will NXP’s back-end manufacturing operations in the Philippines, NXP said. The management team will also also stay.
The semiconductor sector is undergoing rapid consolidation amid slow business growth and intensifying competition.
On Wednesday, Wall Street Journal reported that chip maker Avago Technologies Ltd. is in advanced talks to buy rival Broadcom Corp. for US$35 billion.
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