Chipmaker Broadcom plans unsolicited bid for Qualcomm

Kelvin Reese
November 4, 2017

Broadcom is looking into an unsolicited bid to acquire Qualcomm for more than $100 billion, according to sources.

Qualcomm's shares have been trading in the low $50s for much of this year - down about 15 percent because of its fierce legal battle with Apple and hefty fines/lawsuits from anti-monopoly regulators in the U.S., South Korea and Taiwan.

A Qualcomm spokeswoman declined to comment. Though the merged companies took the Broadcom name, Avago's Chief Executive Hock Tan and his executive team run the company. At $70 a share, an offer would value Qualcomm at $103 billion.

Broadcom keeps a presence in Irvine and a USA headquarters in San Jose.

Reports in The Wall Street Journal and elsewhere say Apple is contemplating kicking Qualcomm out of its devices entirely, possibly replacing it with Intel chips. For one, Qualcomm is in the midst of a legal dispute with Apple, with the dispute having started in January when Apple sued Qualcomm for $1 billion.

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"Maybe they have a better relationship with Apple, maybe they settle", Rasgon said. Apple, in suing Qualcomm, thinks the company is nonetheless overcharging for use industry standard patents, which the law requires be licensed out on fair, reasonable, and non-discriminatory (or "FRAND") terms. Qualcomm has countered that Apple, one of its largest customers, has lied to regulators in an unfair attempt to bully its opponent into charging less.

This comes at a time when Qualcomm itself is trying to complete a $47 billion purchase of NXP Semiconductors.

Aside from the financial challenges of such a large deal, Broadcom may also encounter close regulatory scrutiny.

With the introduction of the iPhone 7 and iPhone 7 Plus, Apple brought in Intel for its LTE chips and there have been rumors that the iPhone manufacturer might also bring in MediaTek to bring an end to the business relationship with Qualcomm.

Such a deal would cap an ongoing consolidation of the semiconductor industry.

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