Shares of NXP Semiconductors (NASDAQ:NXPI) are in full focus after a report stated Samsung plans to acquire the chipmaker. During intraday trading, NXPI stock surged as much as 10% to $194.70 before giving away some of its gains. Asian Tech Press (ATP) reported Samsung’s de-facto leader, Lee Jae-yong, will disclose more about a potential merger or acquisition while he is visiting Europe between now and June 18.
As the name suggests, NXP engages in semiconductor solutions. The Netherlands-based company operates in several industries, such as automotive, mobile and communication infrastructure.
Shares of NXPI stock were down 23% year-to-date before the news broke today.
NXPI Stock: Samsung May Acquire NXP Semiconductors
The acquisition of NXP would allow Samsung to lock up a major customer of Taiwan Semiconductors (NYSE:TSM). The company competes with TSM in the chip foundry industry. The ATP report also mentioned Samsung is bullish on the automotive semiconductor market as vehicles shift towards electric power and autonomous driving. In addition, the potential acquisition will be an “important strategy for Samsung to poach TSMC customers.”
It’s been long rumored that Samsung has sought to acquire NXP. In August, The Korea Times reported the chipmaker was on its list of potential acquisitions. However, the company stalled its efforts because the acquisition could potentially violate antitrust laws.
During February of last year, the publication reported Samsung was interested in acquiring an automotive chip company, such as NXP or Texas Instruments (NASDAQ:TXN). Samsung may have not followed through due to the coronavirus pandemic.
According to Investor’s Business Daily (IBD), NXP ranks 13th out of 34 total companies in its fabless semiconductor industry group. The company also carries an IBD Composite Rating of 73 out of 99. The rating takes into account several factors, such as fundamentals and technical metrics. IBD states that strong growth stocks generally score a Composite Rating of 90 or higher.
Six months ago, the fabless semiconductor industry ranked as IBD’s number one industry group. Today, the ranking has fallen to 158 out of 197 total as concern grows that the uptrend in the chip cycle has peaked.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.