If Broadcom Ltd’s $103 billion bid for Qualcomm Inc goes through, it may bring on a fight with Intel Corp over the production of next generation communications chips needed for connected cars. Most automakers have added wireless chips to download just about anything from maps to entertainment and in the next few years every new car will be connected. “The amount of chips per car is going to grow dramatically,” said Egil Juliussen, analyst of automotive technology.
Chip makers are trying to create the fifth generation of mobile networks to link phones as well as cars, drones and even industrial devices like smart street lights. Qualcomm was the leading communications chip maker for mobile phones for quite some time and now computer chip maker Intel has begun making its way into the sector.
Currently, both companies supply about half of Apple Inc’s iPhone communications chips. Tristan Gerra, a senior semiconductor analyst, stated that currently only about 12 million of the 90 million cars manufactured annually possess internet connectivity and connectivity will be universal for self-driving cars. “You basically (will) have 80 million units per year that are going to get a modem,” Gerra said. Qualcomm is trying to acquire NXP Semiconductors for $38 billion, a maker of automotive chips.
A affiliation between the companies could create a formidable competitor in the automotive chip space. Intel and Nvidia Corpas are believed to be the leaders in the emerging market, but the combined Broadcom-Qualcomm-NXP is a convincing third. If Broadcom signs both deals, its market position may become dominant, believed by analyst Karl Ackerman. “[Broadcom] would basically own the majority of the high-end components in the smart phone market and they would have a very significant influence on 5G standards, which are paramount as you think about autonomous vehicles” and connected factories, he said.