Broadcom explores deal to buy Qualcomm

Broadcom explores deal to buy Qualcomm

Broadcom explores deal to buy Qualcomm

It would be the biggest-ever purchase of a semiconductor manufacturer.

Broadcom is looking into an unsolicited bid to acquire Qualcomm for more than $100 billion, according to sources.

According to the Bloomberg report, Broadcom is in talks with financial advisers. No final decisions have been made and there's no guarantee a deal will go ahead.

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.

Qualcomm, based in San Diego, is also confronting headwinds in closing its $47 billion purchase of NXP Semiconductors.

A tie-up would combine two of the largest makers of wireless communications chips for mobile phones and raises the stakes for Intel Corp, which has been diversifying into smartphone technology from its stronghold in computers. No concrete decisions on the matter have yet been reached and it's now unclear what conditions would the semiconductor company be prepared to offer to Qualcomm and what level of a bid would the San Diego, California-based tech giant be prepared to consider.

A deal of this kind aligns with the current industry trend of consolidation, but also keep in mind that Broadcom is the largest maker of Wi-Fi chips in the world, while Qualcomm is the largest maker of modems. Well, Qualcomm happens to be in the middle of an ongoing existential crisis perpetuated by a legal showdown with Apple, which has always been a Qualcomm buyer for wireless modems that enable the iPhone to communicate with telecom networks.

Broadcom's Wi-Fi chips are essentially a commodity and priced much lower than the modem chips. Apple, in suing Qualcomm, thinks the company is nonetheless overcharging for use industry standard patents, which the law requires be licensed out on fair, reasonable, and non-discriminatory (or "FRAND") terms.

Most recently, Qualcomm filed yet another lawsuit against Apple, with the chipmaker accusing the iPhone maker of breaching a software license contract.

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