Nvidia (NASDAQ:NVDA) recently acquired Icera, which offers baseband processors for smartphones and tablets, for a valuation of $367 million in cash.  This acquisition gives Nvidia the chance to strengthen its chipset business, and compete against Qualcomm (NASDAQ:QCOM), Broadcom (NASDAQ:BRCM), Marvell (NASDAQ:MRVL), Infineon (now acquired by Intel (NASDAQ:INTC)) and Texas Instruments (NYSE:TXN). Qualcomm holds patents in CDMA, WCDMA, OFDMA technology, and is the leader in the baseband chipset market based on this technology with a share of around 65% as of 2010.
According to Nvidia, Icera is a perfect fit that will enhance its position in the baseband processor market. Baseband processors represent one of the fastest growing segments in the technology industry, at an estimated annual market size of about $15 billion.  Last year, Intel agreed to buy the baseband chipset player Infineon for a valuation of $1.4 billion. These trends indicate that the M&A market for baseband chipset players is heating up.
Our price estimate for Qualcomm stock, at $57.23, is ahead of market price.Notes: