Qualcomm shares spike on reports of planned Broadcom bid

04 November, 2017, 00:55 | Author: Marie Harrington
  • People crowd into the Qualcomm booth to view a series of new products during the annual Consumer Electronics Show

The $70-per-share price values Qualcomm at $103.2 billion.

Bloomberg, which was the first to report the news, said Broadcom has yet to make a final decision on the move.

Broadcom was created previous year when Tan's Avago Technologies Ltd. bought Irvine-based chipmaker Broadcom Corp. for $37 billion and then adopted the Broadcom name for the combined company.

Broadcom, created in 2016 when Avago Technologies Ltd. acquired then-Broadcom Corp. for $37-billion, said this week it will return its headquarters to the USA from Singapore.

Apple currently uses both Intel and Qualcomm modem components, but the iPhone maker is now in a dragged-out legal fight over Qualcomm patents and the fees demanded to license the technology of those patents.

Qualcomm finds itself in a weakened state. Before Friday, its shares had slumped 16 percent this year, compared with a 41 percent surge in the Philadelphia Semiconductor Index.

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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. As a result, there is talk that the 2018 iPhone and iPad models will feature modem chips made by Intel and MediaTek. A subsequent report in the Wall Street Journal said the bid could come as early as this weekend.

"Maybe they have a better relationship with Apple, maybe they settle", Rasgon said. 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.

Qualcomm, based in San Diego, California, is also confronting headwinds in closing its $47 billion purchase of NXP Semiconductors NV.

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

A tie-up between the two chipmakers would be the latest in the semiconductor industry that has been rapidly consolidating as companies try to capture a big share of the fast-growing market for connected devices and connected cars.

Qualcomm may soon be extended a way out courtesy of Broadcom, which itself supplies Apple with Wi-Fi and Bluetooth combo chips.

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