In the one of the largest tech deals in history -- and the biggest ever in semiconductors -- smartphone processor and modem king Qualcomm (NASDAQ: QCOM) has agreed to acquire Netherlands-based NXP (NASDAQ: NXPI) for $110 a share, equal  to $47 billion. The all-cash deal announced Thursday is expected to close by the end of 2017.

Investors cheered the long-rumored arrangement, pushing Qualcomm stock up 4% by midday following the announcement. NXP rose by a more modest 1%, but much of its  21% stock price jump over the past month was fueled by buyout speculation.

Qualcomm has long dominated the smartphone chip space, and it still generates significant revenue from it, though the market for the devices is becoming saturated. Bringing NXP into the fold will diversify the company's industry reach, be "significantly accretive to non-GAAP EPS immediately upon close," and allow it to shave an estimated $500 million in overall overhead within two years.

Like other chip makers that have found themselves reliant on slowing sectors, Qualcomm is aggressively pursuing alternative, burgeoning markets including the Internet of Things (IoT), virtual reality (VR), and data security. The acquisition of NXP will instantly open up new opportunities. According to Qualcomm, by 2020, the combined company will have a serviceable market estimated at $138 billion.

One obvious opportunity will involve taking advantage of NXP's dominance in automotive infotainment systems, a market Qualcomm has been exploring. Including its networking and security solutions, NXP counts 14 of the top 15 infotainment suppliers as customers.

Qualcomm said it would use "offshore cash" to limit the amount of newly issued debt it will need to fund the acquisition of NXP.

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Tim Brugger has no position in any stocks mentioned. 

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