SAN FRANCISCO — Chip maker Broadcom Ltd. is planning to bid more than $100 billion for larger rival Qualcomm in what would be the largest tech acquisition ever, according to published reports that cite unnamed sources.
According to one report by the Reuters news service, Broadcom is considering bidding $70 to $80 per share for Qualcomm, the largest maker of mobile phone chips, which would value the company at more than $103 billion. Qualcomm has at this point not been made aware of the bid, sources told Reuters.
A bid of this magnitude for Qualcomm would be a massive deal, even in a period of unprecedented consolidation for the semiconductor industry. Qualcomm itself is still in the process of trying to close a deal for European chip maker NXP Semiconductors — first announced a year ago — which is to date the largest announced semiconductor firm acquisition.
A combined Qualcom, NXP and Broadcom could have total semiconductor sales of $40 billion, making it the third largest chip company ahead of TSMC but below Samsung and Intel, according to Rob Lineback of market watcher IC Insights. Such a deal would make 2017 the largest on record in semiconductor mergers with an estimated value of $120 billion including a reported merger proposal between Cavium and Marvell, he added.
Analysts reached by EE Times expressed some doubts that an acquisition of Qualcomm by Broadcom makes sense or would pass the muster with regulators.
"While it's feasible, it would not be possible at this time with the NXP deal under review," said Jim McGregor, principal analyst at Tirias Research. "I also have serious doubts about it, and it would face regulatory scrutiny."
Regulators around the world would closely scrutinize several product areas including Wi-Fi, Bluetooth, and other RF chips, as well as some embedded processing segments if the Qualcomm acquisition includes NXP, said Lineback.
Handel Jones, CEO of International Business Strategies Inc. (IBS), a Los Gatos, Calif.-based consulting firm, said NXP might be what Broadcom is most interested in. "There would be good synergy between Broadcom and NXP," he said.
Hock Tan, Broadcom's CEO, has been aggressive in pursuing major acquisitions, even of larger companies. Case in point: Broadcom Ltd. was formed by the 2016 acquisition of Broadcom Corp. by the smaller Avago Technologies for $37 billion. Tan was CEO of Avago and engineered the deal.
Broadcom announced Thursday (Nov. 2) it would relocate its main headquarters to the U.S. from Singapore, a move hailed by the Trump Administration as a testament to the power of a corporate tax reform proposal currently being pushed by Republican lawmakers.
The Wall Street Journal reported Friday that Marvell Technology is in talks to acquire another communications chip vendor — Cavium Technologies — in a move that would create a company with a combined valuation of about $14.5 billion.
— Dylan McGrath is the editor-in-chief of EE Times.
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