NXP Semiconductors' acquisition of Freescale Semiconductor will create "a true powerhouse" in the segment, NXP CEO Rick Clemmer said on Monday.

"It's a consolidating industry, and I think it's only natural that the industry continues to consolidate," Clemmer said in an interview on CNBC's "Squawk on the Street."

The chipmaker agreed to buy Freescale, its smaller peer, and merge operations in a deal valuing the combined company at over $40 billion.

The deal, announced by the pair late on Sunday and first reported by Reuters, will make the business the industry leader within the auto and industrial semiconductor markets.

NXP and Freescale shares were trading about 16 and 11 percent higher, respectively, on Monday morning.



NXP will aim for $200 million in cost synergies for its first year and shoot for $500 million after that, Clemmer said. He added that the merger creates an opportunity to "significantly increase" NXP's revenue.