Qualcomm Inc. (QCOM) is making further inroads into the self-driving vehicle market by getting a permit to test autonomous vehicles on the streets of California.
The California Department of Motor Vehicles confirmed to CNBC via an email that it issued the permit last week for Qualcomm to test one autonomous vehicle and three drivers. The issuing of the permit comes as the race to bring self-driving cars to the roads heats up. Rival chip company NVIDIA Corp. (NVDA) has been testing self-driving vehicles in the state of California for a little over a year while Samsung Electronics (SSNLF) also received a permit in the state. Intel Corp. (INTC) another chipmaker going after autonomous vehicles, doesn’t have a permit for testing yet in California.
"We certainly expect to be a key player in the autonomous space," said Nakul Duggal, Qualcomm's vice president of product management for automotive, in an interview with CNBC, but he did not provide any details about projects underway at the San Diego-based semiconductor company. The executive did point to the company’s 9150 C-V2X chipset, which was announced in September and which enables cars to talk to each other and to infrastructure such as traffic signals. Duggal said the chips can improve safety for self-driving cars. Qualcomm and partner Ford Motor Co. (F) have started trials of the chipset in San Diego with future testing planned for Michigan, China, Germany, Italy and Japan, Duggal said.
While Qualcomm chips outside of the mobile market are currently used for telematics and infotainment systems in vehicles, its proposed acquisition of NXP Semiconductor NV (NXPI) is expected to give it a bigger foothold in the self-driving market. That deal hasn’t closed yet. Qualcomm is paying $110 a share for the Netherlands-based chipmaker, but it could be forced to raise that offer after Elliott Management, an activist investor, laid out a scenario valuing NXP shares at $135, nearly 23% higher than Qualcomm's bid price. (See also: Why Qualcomm May Have To Pay 20% or More For NXP.)
In November, rival Broadcom Ltd. (AVGO) made a $130 billion unsolicited bid for Qualcomm, which its board unanimously rejected. Since then, Broadcom has gotten more hostile, earlier this month proposing an entirely new slate of directors for Qualcomm’s board.
For the semiconductor company and other chipmakers, the self-driving car market is a huge opportunity given the number of chips required to make the technology work. That is expected to boost sales for the ones that emerge as winners in the race. It's also a way for Qualcomm to diversify beyond the mobile phone market, which is now seen as saturated.