For a few months now, a major acquisition has been brewing in the semiconductor industry and that is Broadcom’s plan to take over Qualcomm. Latest reports says if Broadcom succeeds, it may itself get acquired by Intel.
Intel is the king of chipmakers for personal computers in the world but it really has no presence in the mobile industry. Its attempt to enter into the mobile space a few years ago failed even after spending a lot of money.
According to the Wall Street Journal “Intel is watching the takeover battle closely and is eager for Broadcom to fail [at acquiring Qualcomm] as the combined company would pose a serious competitive threat, the people said.”
At the moment, Intel will be pulling strings to see that Broadcom doesn’t acquire Qualcomm, and if it doesn’t succeed Intel will then be forced to acquire Broadcom. The initial buy-out price we are looking it at is a whopping $109 billion.
Funny enough, Intel is not the only one that wants the acquisition to fail. The US Govt. also doesn’t want it to succeed. The US has set up a committee on foreign investment whose job is to regulate the acquisitions of American companies by foreign ones.
Broadcom is seen as a foreign company as it is legally considered to be based in Singapore or better put, domiciled in Singapore even though most of its employees and offices are in the US. However, Broadcom is already planning to re-domicile to the US as a result of the tax reform plan.
Apart from that, the committee also thinks that the take-over will cause a “reduction in Qualcomm’s long-term technological competitiveness and influence in standard setting (which) would significantly impact US national security”. The acquisition will weaken Qualcomm’s position as a technological leader and “leave an opening for China to expand its influence on the 5G standard-setting process” the committee said recently.
The outcome of the acquisition is still unknown but it appears Qualcomm doesn’t mind as the only issue it has is with Broadcom’s offer. If a better offer is presented and accepted, then the focus will be turned to Intel’s takeover of Broadcom.