Qualcomm Buys NXP for $39 Billion in Massive Merger of Leading Chip Makers

The world’s largest mobile phone chip maker is acquiring a semiconductor company that is the biggest chip supplier in automotive markets. Qualcomm is buying NXP Semiconductors NV for a staggering $47 billion—the second biggest technology transaction ever, behind only Dell’s gargantuan acquisition of EMC for $67 billion.

The move will diversify Qualcomm’s product portfolio. As the global smartphone market reaches saturation, growth in the mobile chip business is set to slow. Now the company can operate in new markets and tap into the Internet of Things as it looks to connect phones to cars and, eventually, everything.

NXP’s projected revenue for 2016 is $9.5 billion; Qualcomm’s is $23 billion. The combined behemoth will boast more than $30 billion in annual revenue and growth prospects are strong, believes Chief Executive Officer Steve Mollenkopf. Automotive and IoT are verticals with higher profit margins than mobile, he says, another benefit of the acquisition.

The combined company will have 77,000 employees.

Qualcomm shares rose 3% on the news.