An 11-hour flight from San Francisco to Frankfurt in mid-June flipped almost every expectation in Lars Reger’s business life — lock, stock, and barrel. Anticipating the eventual merger between Qualcomm and NXP Semiconductors, Reger, NXP’s automotive CTO, had devised a technology roadmap for an automotive division that generates roughly half of NXP’s revenue.

Eleven hours earlier, Reger was resting in an airport lounge after the NXP Connects Conference in Santa Clara, awaiting his flight home. At that moment, someone approached Reger and asked him about an article in that day’s South China Morning Post. The title: “Beijing ‘approves Qualcomm’s purchase of NXP.’”

NXP and Qualcomm had been waiting 20 months for this moment. Reger broke into a big smile, high-fived his colleague, and ordered champagne.

Now fast-forward 11 hours. Reger lands in Frankfurt, only to encounter another stranger asking him if he’s heard the latest. Reger, with a broken foot, said, “No. I’ve been in a wheelchair, couldn’t really move around, and haven’t checked any news.”

The stranger said, “The Qualcomm-NXP merger is a bust.”

He was referring to a Reuters’ follow-up on the South China Morning Post’s report, citing three sources who said that they were not aware of any Chinese approval. The story also alluded to an ominous twist: The U.S. tariffs on Chinese goods to be unveiled later that day might just queer the whole deal.

Twenty months after it was announced, a $44 billion mega-merger still hung in limbo, and the notoriously capricious Chinese government appeared to have the final say.

Reger, over the moon on his flight to Frankfurt, felt a tightening in his chest and saw his world gone upside-down. He asked himself, “Is this a drama or what?” His next question was, “What did I just lose?”

Although it wasn’t until July, a month later, when Qualcomm CEO Steve Mollenkopf officially scuttled his bid for NXP, when the difficulty of consummating the marriage had already dawned.

‘What did I lose?’
The union of the two companies had an explicit goal for Qualcomm as it strove to diversify beyond the smartphone technology business that the San Diego company dominated.

More significantly, the industry expected the merger to give birth to a formidable automotive technology company. “With NXP, Qualcomm would have had the entire car, and together, they may have offered competitive solutions for Levels 4 and 5 autonomous control,” said Jim McGregor, founder of Tirias Research.

For NXP, already the No. 1 automotive chip supplier in the world, Qualcomm offered a wealth of technologies that it needed to usher in the future of highly automated vehicles.

Reger, quickly coping with the eventual collapse of the deal, did a little math in his head: “Things I lost include cellular technologies — not just 5G but also 4G.” Also, “I no longer have the Snapdragon SoC platform.” The merger would have enabled NXP to use Snapdragon not only for in-vehicle infotainment systems but also “for sensor fusion,” according to Reger.

The big plan was to combine Qualcomm’s Snapdragon with NXP’s Layerscape processors (originally developed by what used to be Freescale’s digital networking group), said Reger, to push NXP’s Bluebox platform further to autonomy — Level 3 and beyond. Significantly absent from NXP’s auto tech portfolio was a high-performance computing device that could go with NXP’s functional safety chips.

But as one astute EE Times reader remarked on EE Times message forum, “When it comes to corporate acquisitions, losing the bid is more often than not the winning move in the long run.”

It didn’t take long for Reger to realize that “nothing has collapsed.” Even with the deal ditched, NXP’s automotive product roadmap remained in place.

As soon as Qualcomm walked away from the merger plan in late July, Reger heard companies knocking on NXP’s door. By early August, a couple of suitors were asking Reger, “Now that you are no longer tied to [Qualcomm], can we partner?”

Declining to name names, Reger said that these new partnership discussions are ongoing. While Reger declined to comment, NXP’s goal appears to be close to a deal within the next few quarters.

Autonomous vehicle hype cycle
Meanwhile, since summer, a once red-hot industry debate on robo-cars has cooled. Last month, Nvidia announced that it is downgrading its AI-based Nvidia Drive AGX Xavier System — originally designed for Level 4 autonomous vehicles — to Level 2+ cars. Tesla has decided to take its full self-driving (FSD) option off the menu “to avoid confusion.” Timing for the FSD rollout has become indefinite.

In parallel, new concerns began swirling around in the industry. Because carmakers haven’t yet nailed down their Level 2 advanced driver assistance systems (ADAS), Level 4 cars appear to be a lot further down the road.

The Insurance Institute for Highway Safety’s (IIHS) ADAS tests over the past summer exposed big gaps in Level 2 vehicle performance under a host of different scenarios. The systems proved fallible in numerous circumstances. In some cases, certain models equipped with ADAS are apparently blind to stopped vehicles and could even steer directly into a crash.

Against the market’s changing narrative on autonomous vehicles, it’s not surprising to hear Reger say that “the hype cycle of Level 5 cars — fully automated vehicles — has fallen off the cliff.” He recalled the time, a few years ago, when the initial excitement about EVs took a similar nosedive. Consumers were turned off by the prospect of an EV that couldn’t last 200 miles without a recharge.