In step forward that would get Austin Powers’ Dr. Evil scream in pleasure; chipmaker Broadcom is reportedly contemplating acquiring associate chipmaker Qualcomm for $100 billion with a capital B.
What Report Says
According to Bloomberg; Broadcom is currently in talks with authorities on how to best access the possible bid; which is likely to be official in the next couple of days. The unnamed sources also emphasized that no final declaration had been made; however, so there is still a possibility for Broadcom to not advance with a bid.
Will Broadcom Bid Turn Into A Deal?
For Broadcom and Qualcomm, the $100 billion bid would make a significant contract of reason. A deal of this sort follows with the current business trend of stabilization; but also keep in understanding that Broadcom is the largest maker of Wi-Fi chips in the world; while Qualcomm is the most significant maker of modems. As such, if Broadcom were to own Qualcomm; the resulting entity would be in a favorable position to bargain with the likes of Apple and Samsung.
There would also be some synergy with the bid since both companies manufacture chips; that connect devices to each other and to the Internet. That synergy would surely benefit Broadcom; especially with the Internet of Things not yet relinquishing its huge potential.
Qualcomm’s Legal Cases
The $100 billion bid would be far from a sure thing if made official; however. For one, Qualcomm is in the middle of a juridical dispute with Apple; with the fight having risen in January when Apple prosecuted Qualcomm for $1 billion. The chipmaker countersued the Cupertino-based company in April; attempted directives to stop iPhone sales in the US and China, and filed a prosecution over copyright infringement.
Most recently, Qualcomm filed yet another lawsuit against Apple; with the chipmaker accusing the iPhone maker of breaching a software license contract.
With these claims, however, Qualcomm is in an unenviable situation; that could significantly change the chipmaker’s market model and investments going forward. If Samsung’s juridical dispute with Apple has shown us; these processes take time to unwind, but there is no doubting the financial uncertainty of a buyout.
Considering Broadcom still chooses to move forward with its $100 billion bid of Qualcomm; such a bid would furnish Broadcom significant advantage over components; like Wi-Fi and cellular modem chips. As such, the chipmaker could be heavily monitored by industry regulators.
Also, the $100 billion buyouts would be the most significant purchase of a chipmaker; so Broadcom and Qualcomm will need to make solid cases for such an investment.
We’ll be giving close attention in the next few days to a possible announcement; so stay tuned for further updates.