NXP Expands Autonomous Driving Portfolio With OmniPHY Buyout

Credit: Shutterstock photo

NXP Semiconductors N.V.NXPI recently acquired high-speed automotive Ethernet subsystem technology provider, OmniPHY, for an undisclosed amount. This deal marks a major step for NXP in its efforts toward autonomous driving, as the industry witnesses a revolution in automotive networking.

What Drove the Acquisition?

With the evolution of self-driven cars, the need for high data capacity and speed has become increasingly important. Upcoming next-generation vehicles will require more advanced capabilities like eight or more cameras, high definition radar, lidar and V2X capability. These requirements will create newer and more complex challenges for current car networks.

The synergistic combination of NXP's long documented expertise in vehicle networking and OmniPHY's high quality technology will enhance the delivery of automotive Ethernet solutions and speed up the advancement of the former in the rapidly evolving self-driving industry.

NXP is optimistic about its automotive business, which raked in record revenues of more than $1 billion in its last reported quarter, marking a healthy 7% year-over-year rally.

Other Strategic Growth Driving Initiatives

NXP has conducted certain acquisitions in the past, which have proved to be fruitful for its business. The most significant buyout was of Freescale in 2015, which propelled NXP to the top, making it the largest semiconductor supplier to the automotive industry.

Apart from acquisitions, intelligent divestitures like the spin-off of its Standard Products business has been beneficial for the company and has allowed it to focus on high growth segments.

NXP's Road to Recovery

The acquisition of OmniPHY comes weeks after the termination of the Qualcomm-NXP deal. The broken deal, which would have been the largest acquisition in the chip industry, caused NXP's shares to plummet, prompting a decision to buy back $5 billion worth of its shares. On a year-to-date basis, NXP's shares have lost 20.4% compared to the industry 's decline of 0.1%.

The NXP-OmniPHY deal makes us optimistic about the prospects of NXP as an independent player in the emerging automotive networking market.

Zacks Rank & Stocks to Consider

NXP currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader Computer and Technology sector are Qualys, Inc. QLYS and Fortinet, Inc. FTNT , each sporting a Zacks Rank #1 (Strong Buy), and Virtusa Corporation VRTU , carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Long-term earnings growth for Qualys, Fortinet and Virtusa is projected to be 8%, 16.8% and 20% respectively.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Fortinet, Inc. (FTNT): Free Stock Analysis Report

Qualys, Inc. (QLYS): Free Stock Analysis Report

Virtusa Corporation (VRTU): Free Stock Analysis Report

NXP Semiconductors N.V. (NXPI): Free Stock Analysis Report

To read this article on click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos


Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

Learn More