Qualcomm Inc. has teamed up with investment firm SSW Partners to acquire Stockholm-based smart car technology supplier Veoneer Inc. in a deal worth $4.6 billion.

The all-cash transaction, announced today, advances Qualcomm’s effort to establish a bigger presence in the auto market. 

According to the chipmaker, the deal values Veoneer at a hefty 86% premium to its last trading price before word emerged that the company was considering a sale. The $4.6 billion price tag is also 16% higher than the value of a competing acquisition offer that the Veoneer had received before Qualcomm and SSW made their bid. The competing offer was submitted by auto part maker Magna International Inc., which will receive a $110 million deal termination fee. 

Veoneer develops hardware and software components for building advanced driver assistance systems, which enable vehicles to operate on a partially autonomous basis. Cars equipped with Veoneer’s technology can park themselves, help drivers maintain a safe distance from other vehicles and perform a variety of other tasks. The company generated $1.37 billion in revenue last year across its various businesses.

Qualcomm, however, is buying Veoneer to acquire one one business in particular: the Arriver autonomous driving unit. Under the terms of the acquisition, SSW Partners, the investment firm with which Qualcomm has partnered on the deal, will purchase all outstanding Veoneer stock. Once the deal closes, SSW Partners will sell Arriver to Qualcomm.

Arriver launched last year as a joint venture between Veoneer and Qualcomm. The unit aims to develop a hardware and software system that can be installed in vehicles to equip them with partial autonomous driving capabilities. In the longer term, Arriver will work to develop technology that will allow vehicles to operate on a fully automated basis. 

Earlier this year, Arriver disclosed that its near-term objective to develop a system capable of facilitating Level 3 autonomy by 2024. Vehicles with Level 3 autonomy can operate without any input under many cases, but they still require the driver to take over in certain situations. Arriver will build the system by combining hardware from Qualcomm with Veoneer’s autonomous driving software.

As part of the development effort, Arriver is working on a neural network for Level 3 autonomy that was described in January as 100 times more powerful than its current-generation artificial intelligence software. The unit is also developing new data fusion software, which will help its autonomous driving system turn information from a vehicle’s sensors into driving decisions. Arriver said that the data fusion software will be capable of using information from lidar and radar units as well as thermal and ultrasonic sensing devices. 

On the hardware side, Arriver’s autonomous driving stack uses Qualcomm’s Snapdragon Ride systems-on-chip for processing. 

Acquiring Arriver will enable Qualcomm to bring the unit’s AI algorithms and other autonomous driving software in-house. As a result, the company will gain the ability to offer automakers building autonomous vehicles not only its Snapdragon Ride chips but also an expansive set of software tools. Such an integrated, all-in-one product portfolio could make vehicle development easier for auto sector customers by reducing the number of components they need to create on their own, and in the process make Qualcomm’s value proposition more competitive. 

“Qualcomm is the natural owner of Arriver,” said Qualcomm Chief Executive Officer Cristiano Amon. “By integrating these assets, Qualcomm accelerates its ability to deliver a leading and horizontal ADAS solution as part of its digital chassis platform. We believe that this transaction and structure benefits both Qualcomm’s and Veoneer’s shareholders, positions all of Veoneer’s businesses for success and provides a compelling opportunity to customers and employees.”

Qualcomm’s Snapdragon Ride chip series, the other foundational component of its auto sector strategy, is based on five-nanometer manufacturing technology. Snapdragon Ride allows carmakers to release software updates with new features to their vehicles over the air. Multiple Snapdragon Ride units can be incorporated into a vehicle to increase performance, which should make it easier to meet the requirements of processor-intensive autonomous driving software. 

Qualcomm said it expects the acquisition of Veoneer to be completed in 2022. 

Photo: Qualcomm