NXP to buy Freescale for $11.8B to create chip giant

NXP Semiconductor has agreed to purchase Austin, Texas-based Freescale Semiconductor in a deal valued at $11.8 billion, creating a $40 billion chip giant that will be a dominant supplier for the internet of things. Both companies are large chip providers in automotive and sensor markets as well as microcontroller vendors. As the internet of things expands and makes the embedded market more of a monolithic industry like the PC and mobile markets, we’re going to see the chip firms act accordingly. That means consolidation.

John Doerr says Google is designing its own chips and Facebook is next

According to venture legend John Doerr, Google is designing its own silicon for its data centers. But he stopped short of confirming rumors that the search giant was designing ARM-based chips as was reported in December. Doerr, speaking at a chip conference, also said that Facebook would be next. He’s right. Computing is the primary cost for Google, Amazon Web Services and Facebook and designing their own silicon could lower that cost. And thanks to more modular designs and advances in the ARM architecture, the cost of designing custom chips has fallen into a range where the benefits outweigh design costs.

IBM may sell its chip business or look for a joint venture partner, report claims

IBM(s ibm) is considering a sale of its chip business, according to a report in the Financial Times. The article suggested that IBM may also look for a new partner with which it could spin off a joint venture, but either way it’s appointed Goldman Sachs(s gs) to see if anyone’s interested. IBM’s semiconductor business is very cutting-edge, experimenting with new materials and technologies such as photonics, graphene and carbon nanotubes. Its Power architecture is also used in some IBM servers and supercomputers such as Watson. IBM said last month that it was selling its x86-architecture server business to Lenovo, the same company that took on its PC business in 2004.

The data center drives Avago’s planned $6.6B LSI buy

Avago Technologies (s avgo) has agreed to buy LSI Corp. (s LSI) for $11.15 per share in an all-cash transaction valued at $6.6 billion. The deal will add LSI’s enterprise storage capabilities to Avago‚Äôs networking and industrial businesses. As the data center consolidates and becomes more virtualized the chip industry is reacting with more integration. This deal can be seen as an extension of that trend.