Qualcomm to Acquire CSR; Eyes Internet of Things Market
The world’s largest mobile chipset developer, Qualcomm Inc. (QCOM), has decided to purchase CSR plc – a leading developer of bluetooth wireless technology – for $2.5 billion. Qualcomm’s decision to buy CSR plc is an indication that companies operating within the semiconductor industry are trying to increase their footprint in the ‘Internet of Things’ (IoT) market.
The acquisition will boost Qualcomm’s growth categories like Internet of Everything (IoE) and automotive infotainment by enhancing product portfolio and increasing channels and customer base. This should help the company’s efforts to dominate markets and also complement its strategic priorities in these segments.
The deal is expected to close by the end of the summer of 2015. However, it first needs to get both regulatory and CSR shareholders’ approvals. Announced yesterday, the acquisition is likely to be accretive to Qualcomm’s non-GAAP financials in fiscal 2016.
In July 2014, Qualcomm solidified its IoT foothold with the acquisition of Wilocity Ltd., a leading Israeli developer of 60 GHz wireless chipsets based on IEEE 802.11 ad standard, popularly known as WiGig technology. Though WiGig is a much more close-range technology than WiFi, it utilizes a series of frequencies in the 60 GHz band to deliver multigigabit data transfer speeds.
The Internet of Things Market
The Zacks Rank #1 (Strong Buy) company is aiming to capitalize on the anticipated growth in the semiconductors market, driven by growing demand for Internet connectivity in everyday life. Integration of CSR, once acquired, will enable Qualcomm to create the industry’s most comprehensive wireless portfolio of smart connected devices to cater to the wide spectrum of the IoT market.
The IoT concept foresees billions of connected devices and systems with applications ranging from sensors and mobile devices to home appliances and cars. According to market research firm International Data Corporation (IDC.TO), the Internet of Things Market is poised to increase to $7.1 trillion in 2020 from $1.9 trillion in 2013.
Looking Ahead
In the maturing semiconductor industry, it seems acquisitions are becoming the most favored path to achieve growth and expansion. We believe Qualcomm’s decision to acquire CSR plc will benefit the company in the long run in view of the huge untapped opportunity in the Internet of Things market.
Stocks Which Warrant a Look
Other well-placed stocks that warrant a look in this sector include Nokia Corporation (NOK), Aruba Networks, Inc. (ARUN) and Xcerra Corporation (XCRA). All three stocks hold a Zacks Rank #2 (Buy).
Read the Full Research Report on NOK
Read the Full Research Report on QCOM
Read the Full Research Report on ARUN
Read the Full Research Report on XCRA
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