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Broadcom plots $100 billion bid for Qualcomm

Purchase would create third largest chipmaker

Broadcom, perhaps as early as Monday, is planning to make a $100 billion bid for San Diego-based Qualcomm, which has been having troubles and knock-down fights with its big customer, Apple, this year.

Before rumors of the Broadcom bid rattled the street, Qualcomm stock had been down 16 percent this year, while a popular index of semiconductor stocks had risen 41 percent. Qualcomm stock zoomed 13 percent today (November 3) to $61.81. That puts the value of the company at $91 billion, according to bloomberg.com.

Irwin Jacobs

Thus far, Qualcomm has not commented on the prospective bid.

Broadcom has two headquarters — in Singapore and San Jose. This week, Broadcom pleased President Trump by saying it plans to move its headquarters to America.

Qualcomm has been battling with its blue-chip customer Apple. "Qualcomm faces a multinational legal battle with Apple over Qualcomm's licensing terms to Apple, and Apple is considering dropping Qualcomm from its phones," says reuters.com.

Qualcomm "requires customers like Apple and Samsung to license its patents if they use its chips, typically asking for a percentage of the price of the final device…. Apple has objected to that practice, however, and it has a closer relationship with Broadcom than with Qualcomm. If Broadcom were to acquire Qualcomm's patent portfolio and change the licensing, it could have far-reaching effects on the mobile phone industry."

A combined Broadcom and Qualcomm would make Broadcom the third-largest chipmaker, behind Intel and Samsung, and make it the leader in chips made for smartphones, says bloomberg.com.

It is too early to say if San Diego would lose jobs following a combination with Broadcom. Also, it is too early to say if Broadcom's U.S. headquarters would be San Diego instead of San Jose. However, San Jose is in the middle of Silicon Valley, home of chipmaking, smartphones, and other tech devices.

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Broadcom, perhaps as early as Monday, is planning to make a $100 billion bid for San Diego-based Qualcomm, which has been having troubles and knock-down fights with its big customer, Apple, this year.

Before rumors of the Broadcom bid rattled the street, Qualcomm stock had been down 16 percent this year, while a popular index of semiconductor stocks had risen 41 percent. Qualcomm stock zoomed 13 percent today (November 3) to $61.81. That puts the value of the company at $91 billion, according to bloomberg.com.

Irwin Jacobs

Thus far, Qualcomm has not commented on the prospective bid.

Broadcom has two headquarters — in Singapore and San Jose. This week, Broadcom pleased President Trump by saying it plans to move its headquarters to America.

Qualcomm has been battling with its blue-chip customer Apple. "Qualcomm faces a multinational legal battle with Apple over Qualcomm's licensing terms to Apple, and Apple is considering dropping Qualcomm from its phones," says reuters.com.

Qualcomm "requires customers like Apple and Samsung to license its patents if they use its chips, typically asking for a percentage of the price of the final device…. Apple has objected to that practice, however, and it has a closer relationship with Broadcom than with Qualcomm. If Broadcom were to acquire Qualcomm's patent portfolio and change the licensing, it could have far-reaching effects on the mobile phone industry."

A combined Broadcom and Qualcomm would make Broadcom the third-largest chipmaker, behind Intel and Samsung, and make it the leader in chips made for smartphones, says bloomberg.com.

It is too early to say if San Diego would lose jobs following a combination with Broadcom. Also, it is too early to say if Broadcom's U.S. headquarters would be San Diego instead of San Jose. However, San Jose is in the middle of Silicon Valley, home of chipmaking, smartphones, and other tech devices.

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Comments
8

Don, this would be a momentous takeover. Qualcomm has the local reputation as a hard-charging operation, with flaws. The flaws are its heavy use of temps for long-term work, and its abuse of the H-1B visa program. As a local corporate citizen, its record is poor, and the founder/largest stockholder, Irwin Jacobs, along with his sons, is now a force in local politics, and usually not for the good. How things would change. Or would they change on the political front?

As far as local jobs go, every or nearly every such takeover has resulted in a loss of local jobs. In many cases, the whole operation subsequently folded or was moved out of the county. This would not be good news on the local job front. Where will all those H-1B's go?

Nov. 3, 2017

Visduh: You might be right that Qualcomm is not a good local citizen. But its co-founder, Irwin Jacobs, gave something like $125 million to San Diego Symphony. He has given to other worthy causes, too.

Yes, Qualcomm has been one of the nation's major users of H-1B, as numerous Reader articles have pointed out.

It's hard to imagine that Broadcom will move its headquarters to San Diego. Its U.S. headquarters is now in San Jose at the center of Silicon Valley. Best, Don Bauder

Nov. 3, 2017

don bauder You are aware that it is Broadcom Ltd that is involved, not Broadcom Corp, right. Avago Technologies bought Broadcom Corp last year and renamed the merged entities Broadcom Ltd. Since Broadcom Ltd wants to finish that change of location before completing any Qualcomm deal, in order to avoid avoid scrutiny by the Committee on Foreign Investment, it would seem unlikely that their relocation would involve San Diego. I have also heard that Qualcomm closing it's purchase of NXP Semiconductors NV is a consideration in the deal. Assuming of course, that the offer is actually made and is accepted.

Nov. 4, 2017

danfogel: Yes, Qualcomm's pending $38 billion purchase of NXP Semiconductors is still on the table, but Broadcom Ltd. says it would take NXP, according to media reports. Best, Don Bauder

Nov. 4, 2017

BROADCOM LTD. MAKES OFFICIAL BID FOR QUALCOMM. Broadcom Ltd. made its official bid for San Diego's Qualcomm this morning (November 6). Qualcomm shareholders would get $60 in cash and $10 per share in Broadcom stock. Including assumption of Qualcomm's debt, the transaction would be for $130 billion, according to Reuters.

Qualcomm said it would review the proposal and act in the best interest of shareholders. Analysts interviewed by Reuters think Qualcomm is inclined to reject the deal as too low, "and fraught with risk that regulators would reject it or take too long to approve it," says Reuters. Best, Don Bauder

Nov. 6, 2017

If, and it appears that it may be a big if, the deal goes through the impact will be negative on San Diego. Broadcom Ltd. already has a headquarters in California. There will be a downsizing of the number of employees in San Diego due to duplication of Broadcom employees. Local management will be hit hard and some of the production and administrative people. Broadcom will embrace the Hb1 visa types because they, like Qualcomm, are always in pursuit of cheap labor.

Nov. 8, 2017

AlexClarke: There may be a big fight over this takeoff attempt. And it may not pass the antitrust smell test. Qualcomm might put up quite a fight. Yes, Broadcom will almost certainly exploit the H-1B program for cheap labor, as Qualcomm has. Best, Don Bauder

Nov. 8, 2017

Qualcomm in San Diego would be decimated by such a merger just like General Dynamics went down the tubes as far as San Diego goes many decades ago (from formerly the largest employer to ghost employer)... Jobs will start leaking out of San Diego like an old earthen dam in a flood...

If a US Headquarters was established, it would most certainly be in Silicon Valley and NOT in San Diego.

Broadcomm is a foreign based company where the final decisions will be made by some far away over seas executives... It cannot be good for US Industry, for US jobs etc...if this merger between Qualcomm and Broadcom is approved.

I can't see the local Irwin Jacobs Family letting go of their company and all the trappings of local influence, power, prestige...just to cash in a few stock chips in this deal.

But, who knows?! Sol Price sold out the Price Club to Costco. The Price Club disappeared and Costco took over... The same fate could await Qualcomm if the proposed takeover/merger is approved...

Nov. 10, 2017

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