Broadcom is reportedly exploring a massive acquisition of $80 billion Qualcomm

Laverne Mann
November 4, 2017

Evil shriek in happiness, chipmaker Broadcom is reportedly considering buying fellow chipmaker Qualcomm for $100 billion with a capital B.

Qualcomm reported a plunge in net earnings for the fourth quarter of its fiscal year, to $168 million, or 11 cents per diluted share, compared to $1.6 billion, or $1.07 per diluted share, in the same period in 2016.

Why are stockholders happy?

The only other major supplier of high-end chips is Intel Corp, which supplies about half of the modem chips in Apple's iPhones.

Shares of Qualcomm surged roughly 15% on the news, while Broadcom's stock climbed more than 3%.

Broadcom and Qualcomm were once bitter rivals who fought a contentious patent infringement battle in court. Qualcomm is known for its Snapdragon chipsets used to power many smartphones. Qualcomm, in suing Apple, says it is not obligated to license those like to does with industry standard technology.

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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. Both companies declined to comment.

Qualcomm has tried unsuccessfully to halt the sale of iPhones in both the U.S. and China.

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. As such, if Broadcom were to own Qualcomm, the resulting entity would be in a better position to negotiate with the likes of Apple and Samsung.

Broadcom, meanwhile, announced it would return its corporate headquarters to the US, in San Jose.

Qualcomm shares are now up 12.62% to $61.76. It's entirely unclear what would happen to Qualcomm's legal fight with Apple if it does sell itself, but it's likely Broadcom would settle the dispute to avoid incurring more legal costs.

Other reports by MaliBehiribAe

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