Qualcomm up after rumor of Broadcom interest

Todd Singleton
November 4, 2017

Broadcom is considering a bid of more than $100 billion for Qualcomm, according to people familiar with the matter, in what would be the biggest-ever takeover of a chipmaker.

The saga kicked off almost a year ago, in January 2017, when Apple first filed a lawsuit against Qualcomm for allegedly abusing its market position to extract more money from hardware manufacturers. A bid could be for around $70 a share, Bloomberg reported. Qualcomm has a market cap of around $92 billion as of writing while Broadcom is worth almost $113 billion.

Formerly known as Avago Technologies, Broadcom Limited was created past year after Singapore-based Avago acquired Broadcom Corporation for $37 billion. This week, Broadcom said it would move its headquarters from Singapore back to the USA, where it lists an HQ in San Jose, California. Broadcom stock, meanwhile, is trading up almost 6.5 percent.

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Five years ago, when smartphone demand was soaring, Qualcomm briefly overtook Intel in market value. 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. As a result, there is talk that the 2018 iPhone and iPad models will feature modem chips made by Intel and MediaTek.

Qualcomm, an early pioneer in mobile phone chips, supplies so-called modem chips to phone makers such as Apple, Samsung and LG that help the phones connect to wireless data networks. 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. It has faced regulatory scrutiny in Europe, and some shareholders such as activist hedge fund Elliott Management Corp. have said the deal undervalues NXP, a large maker of automotive and other chips.

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