Broadcom looks create biggest chip giant

Hock Tan, Broadcom’s master dealmaker, made an unsolicited $100bn bid for Qualcomm. If Broadcom is successful in convincing Qualcomm’s board, its shareholders and regulators of the merits of the merger, this will be a major deal for semiconductor industry especially Broadcom, which will create a company with a combined market capitalisation in excess of $200bn.

Qualcomm’s mobile processors and modems are well placed for %G rollout in the next few years.  Broadcom which sells a wide range of chip design for networking equipment, from back-end telecoms infrastructure to the WIFI and Bluetooth controllers in modern phones needs LTE and 5G capability that they don’t have today. If this deal goes through Broadcom would have a joint headquarters in San Jose, California, and Singapore. After Broadcom’s $5.9bn acquisition of Brocade, they are expected to cash- and stock bid for Qualcomm and take advantage of the two companies share prices.

Broadcom’s stocks up 60 per cent in the past 12 months, including last week’s 5.5 per cent leap.

Broadcom and Qualcomm are both powerhouses in smartphones. Broadcom, known as Avago before last year makes WiFi chips that are found in most of the iPhones and Android phones. Qualcomm owns key patents over wireless technology. Its Snapdragon platform powers most Android phones and its cellular modems are founds in nearly half of all iPhones and together bother companies generate over $40billion in annual revenue.