NXP Semiconductors, a leading European chipmaker, is reportedly in discussions to acquire Ambarella, a specialist in AI-enabled chips for self-driving car camera technology. The ongoing negotiations are not guaranteed to result in a deal, with the possibility of other bidders or the talks collapsing.

Ambarella, valued at approximately $3.3bn, focuses on edge AI chips, processing data directly on devices. This acquisition would strengthen NXP's automotive chip business, which is expected to contribute nearly 50% of its projected $15.1bn revenue this year. Ambarella's expertise in image-processing semiconductors for security and autonomous driving systems would be a significant addition.

The potential deal occurs amidst a broader trend of consolidation in the semiconductor sector, driven by the AI revolution. Recent examples include Texas Instruments' $7.5bn purchase of Silicon Labs and Soft Bank's $6.5bn acquisition of Ampere Computing. NXP, based in the Netherlands, has historically avoided large-scale acquisitions, with a past attempt to be bought by Qualcomm for $47bn failing due to regulatory issues.