NXP Semiconductors NV (NXPI) is in discussions to acquire Ambarella Inc. (AMBA), a developer of low-power artificial intelligence chips for edge devices, according to a Financial Times report on Friday that sent shares of the acquisition target sharply higher.
The talks are ongoing and may not result in a transaction, the report said, citing people familiar with the matter. Other potential buyers could still emerge, or the negotiations could collapse entirely. Both NXP and Ambarella declined to comment.
Shares of Ambarella, which has a market capitalization of roughly $3.25 billion to $3.3 billion, jumped nearly 17% following the report. NXP stock fell more than 3%, reflecting a common pattern in which acquirer shares dip on deal uncertainty while target shares rise toward the potential offer price.
A deal would significantly expand NXP’s footprint in software-defined vehicles, radar systems and electrification. Ambarella specializes in AI-enabled image-processing semiconductors used in security cameras, autonomous driving systems and robotics. Its chips are designed for edge AI applications, where machine learning models run directly on devices rather than in the cloud, an approach gaining traction as industries seek lower latency and reduced data transmission costs.
The potential acquisition arrives at a moment of strength for NXP. On Tuesday, the Eindhoven, Netherlands-based company forecast quarterly revenue above Wall Street estimates, signaling robust demand for its chips across automotive, industrial and data-center markets. Automotive chips are expected to account for roughly half of NXP’s projected $15.1 billion in revenue this year, making Ambarella’s portfolio a natural strategic fit.
The semiconductor industry has been consolidating rapidly as suppliers position for the AI era. Earlier this year, Texas Instruments Inc. (TXN) agreed to buy Silicon Labs for $7.5 billion. Last year, SoftBank Group Corp. acquired Ampere Computing for $6.5 billion. NXP, by contrast, has largely steered clear of large-scale acquisitions in recent years. Its most notable deal attempt came in 2016, when it agreed to sell itself to Qualcomm Inc. (QCOM) for $47 billion. That transaction collapsed two years later after failing to secure Chinese regulatory approval.
NXP shares have gained about 11% year to date, giving the company a market value of approximately $62 billion as of Friday. Ambarella’s stock has also attracted investor interest amid growing enthusiasm for edge AI, though it remains a fraction of NXP’s size.
If completed, the acquisition would mark a pivot for NXP toward more aggressive dealmaking under Chief Executive Kurt Sievers, who has emphasized organic growth and targeted partnerships since taking the helm. For Ambarella, a deal would provide the scale and distribution network of a far larger semiconductor player at a time when competition in automotive AI chips is intensifying from rivals including Mobileye Global Inc. (MBLY) and Qualcomm.
Investors will now watch for any formal announcement or regulatory filings that could confirm the status of the discussions. The report did not specify a potential deal price, and the Financial Times cautioned that talks remain fluid.