Qualcomm’s chip acquisition is completed!

Latest update time：2024-10-01

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Qualcomm, through its subsidiary Qualcomm Technologies, has reportedly reached an agreement with France-based fabless semiconductor company Sequans Communications to acquire its 4G IoT technology for $200 million.

It is understood that Sequans will continue its 4G IoT business and retain the license to use its 4G IoT technology to maintain existing operations. The transaction is expected to be completed by the end of October 2024. After facing the challenge of almost halving its revenue in 2023, Sequans has been looking for potential buyers. Previously, in 2023, Renesas Electronics attempted to acquire Sequans' business, but the transaction failed.

“We are excited to add Sequans’ 4G IoT technology to Qualcomm’s broad portfolio, further enhancing our reliable and optimized low-power solutions for cellular connectivity focused on industrial IoT applications,” said Nakul Duggal, general manager of the automotive, industrial and embedded IoT, and cloud computing group at Qualcomm Technologies, Inc. “This acquisition supports our commitment to delivering cutting-edge IoT solutions and solidifies our leadership in edge intelligence.”

“We are pleased to have completed this transaction with Qualcomm and retain a perpetual license to continue to use, commercialize and advance these technologies,” said Georges Karam, CEO of Sequans. “This validates the strength of our technology and ensures that our customers will continue to receive top-level support from Sequans and enjoy the benefits of our 4G product portfolio as well as cutting-edge 5G innovations. This asset sale will bring significant benefits to our customers. Sequans has a very strong position in the market with a solid balance sheet, mature technology and a comprehensive product portfolio covering low-power LTE-M/NB-IoT, LTE Cat 1bis and the upcoming 5G Redcap/eRedCap technologies. With the support of an experienced team focused on cellular IoT, Sequans will continue to provide best-in-class IoT products and services.”

The main reason for the Qualcomm acquisition

Qualcomm is already the dominant player in the global 4G IoT (non-automotive) market, with 23% market share, while Sequans has just 0.5%. Excluding the Chinese market, Qualcomm's market share soars to over 59%, while Sequans' share is just 1.4%. This means that the acquisition is not intended to increase market share. However, the deal enables Qualcomm to better serve enterprise customers seeking low-power, reliable cellular connectivity, especially for industrial IoT applications. Incorporating Sequans' advanced 4G IoT technology into Qualcomm's existing suite of IoT solutions will strengthen Qualcomm's position in the industrial IoT market.

From a technology perspective, Qualcomm's strength in the low-power wide-area network (LPWA) sector covers LTE-M, NB-IoT, Cat-1, Cat-4 and higher categories. Although Qualcomm previously faced challenges in the Cat-1 bis market segment, its market share has rapidly increased from 2% to 16% (excluding China) in the past year, showing that Qualcomm can compete effectively and not only rely on external acquisitions (such as Sequans). It is worth noting that the 4G market is dominated by Chinese manufacturers, including Unisoc, Jiefa Technology, Core Wing Information, and Esko Microelectronics, and emerging companies such as Altair Semiconductor are also emerging. This competitive landscape means that Qualcomm may face challenges in certain regions, especially those with strong local 4G ecosystems.

According to Counterpoint Research, Sequans' Monarch series has outperformed Qualcomm's MDM9206 and MDM9205 dual-mode LPWA chipsets with higher performance, lower power consumption and smaller size since its launch in 2018. The acquisition of Sequans technology will help Qualcomm consolidate its market position and effectively address its gap in the LPWA market.

The transaction provides Sequans with significant funding, strengthens its financial stability and enables it to further invest in its IoT business. Sequans will focus on advancing its 5G technology and expanding its market presence. Qualcomm acquired Sequans' 4G IoT technology and licensed it back to Sequans, which enables Sequans to continue to use 4G IoT technology and ensure uninterrupted service to existing markets and customers.

Earlier this year, Sequans strategically reduced its focus on certain market segments, such as FWA broadband, and refocused on its core area of massive IoT. This shift has enabled the company to focus on key technologies and important customer partnerships, such as its collaboration with Itron. Sequans also has some promising projects, including advancements in LTE-M/NB-IoT technology, and the upcoming launch of its 5G RedCap TaurusLT chipset, which are expected to drive the company's growth in the coming years.

Qualcomm's acquisition of Sequans Communications' 4G IoT technology is a strategic move to enhance Qualcomm's IoT product portfolio. Although Sequans has a smaller market share, its advanced 4G technology will strengthen Qualcomm's market position and enable it to provide a wider range of services to enterprise customers seeking reliable, low-power connectivity solutions.

From a technology perspective, the acquisition helps Qualcomm fill gaps in its offering, especially in the LPWA segment, by integrating Sequans' excellent Monarch series chipsets. This move is particularly timely in the current highly competitive 4G market, especially considering that the market is dominated by Chinese manufacturers.

In terms of financials, this transaction provides Sequans with the financial support to strengthen its market position and invest in 5G technology, while retaining its 4G technology to continue to serve the market. Coupled with Sequans' renewed focus on key technologies and partnerships, as well as its future promising projects, Sequans has good growth potential in the future.

Overall, this acquisition reflects Qualcomm's strategic alignment in technology needs and long-term market goals.

Reference Links

https://www.design-reuse.com/news/56850/qualcomm-sequans-4g-iot-4g-iot.html

https://www.counterpointresearch.com/insights/qualcomm-strengthens-iot-leadership-with-acquisition-of-sequans-4g-tech/

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