Become a Member · About 24/7
Already a member? Login
 

$130 Billion Takeover to Shake Up the Chip Industry?

Bloomberg Gadfly columnist Brooke Sutherland and Christopher Rolland, an analyst at Susquehanna Semiconductor, examine Broadcom Ltd.'s $105 billion offer for Qualcomm Inc. on "Bloomberg Daybreak: Americas." By Felix Richter




Semiconductor maker Broadcom made a bid to acquire its rival Qualcomm today in a deal that would be the largest takeover in the tech industry to date.

Broadcom has offered to buy all of the outstanding shares of Qualcomm for $60.00 in cash plus $10.00 per share in Broadcom shares.

The proposed deal would amount to roughly $130 billion and instantly propel Broadcom to third place in the global semiconductor industry.

As our chart illustrates, Broadcom and Qualcomm had a combined market share of 7.4 percent in the ever-growing semiconductor industry last year.

Broadcom's offer comes at a surprising time, considering that Qualcomm is currently entrenched in a legal battle with one of its biggest customers, Apple.

After the iPhone maker had sued Qualcomm for "charging royalties for technologies they have nothing to do with", the chipmaker sued Apple back for allegedly sharing information with semiconductor market leader Intel.

Broadcom Tests the Limits of Semiconductor M&A

Brooke Sutherland, Bloomberg Gadfly columnist

“A Broadcom-Qualcomm deal smacks of peak M&A among semiconductor makers”Brooke Sutherland,
Bloomberg Gadfly columnist 

How many mega-sized semiconductor deals are too many?

That's the question Broadcom Ltd. shareholders should be asking themselves as the chipmaker launches a $130 billion-plus takeover bid for Qualcomm Inc.

The target company has said it will assess the deal, but it's reportedly gearing up to reject Broadcom's $70-a-share cash and stock bid on the grounds that it's opportunistic and poses regulatory risks. These are valid objections, but we've got another one: integration risk.

This would hardly be the first megadeal that either has attempted. Broadcom is the product of a $37 billion merger between Avago Technologies Ltd. and Broadcom Corp. in 2016. Broadcom is also trying to buy Brocade Communications Systems Inc. for $5.9 billion, only about a year after the target company agreed to buy Ruckus Wireless for about $1 billion.

Meanwhile, Broadcom says it's also willing to include Qualcomm's proposed $40 billion-plus purchase of NXP Semiconductors NV in its offer for Qualcomm, should that deal get completed. Don't forget that NXP itself purchased Freescale Semiconductor Ltd. for $17 billion in 2015.

A Broadcom-Qualcomm deal smacks of peak M&A among semiconductor makers. And it may only get more expensive and complicated should Qualcomm successfully negotiate a higher price.

Source: Brooke Sutherland, Bloomberg Gadfly 

 

Global semiconductor sales have risen sharply over the past two decades as the rise of mobile devices has led to a steep increase in demand for microprocessors and memory chips.

In 2016, worldwide semiconductor sales amounted to roughly $340 billion, up from $204 billion at the turn of the millennium.

Global market share of the largest semiconductor vendors in 2016

Related Article: 5 Essential Technology Tools to Include in Your Information Technology Budget

Related Resouces

Download the Paper

Technology Disaster Preparedness & Recovery Guide
This white paper details how taking a few precautionary steps now, you will be able to avoid many potential technology and data disasters and be well prepared to deal with those you cannot avoid. Download Now!


Download the Paper

Building the Next-Gen Intelligent Network
This white paper describes how to achieve a sophisticated level of connectivity and how companies will increasingly need to partner with vendors who can put together the intelligent network skeleton on which the virtualized, cloud computing enterprise can grow. Download Now!


Download the Paper

Securing Your Network in the Age of Bring Your Own Device
This paper looks at the ever-increasing use of mobile devices, and why corporations must stay in tune with its consumerization, implementing a Bring Your Own Device policy to ensure the security of all parties involved - the employee and the corporation. Download Now!


Download the Paper

3 Frontier Communications Case Studies
Learn how Frontier built network solutions for 3 different companies, from Wi-Fi system to Internet-based telecommunications and power infrastructure, Frontier tailored specific solutions to fit each business needs. Download Now!


Download the Paper

3 Things You Need to Know Before Hiring an IT Consultant
This white paper shows you how to have a valuable relationship with an IT consultant and how to ask the right questions about their qualifications, verifying their experience in your industry. Download Now!


Download the Paper

Say Hello to the Right Technology
In this eBook, we’ll examine connectivity solutions that can address these issues and provide workgroups with the tools they need to be more productive, helping businesses run more efficiently. Download Now!


More from Frontier Business




Comments
1 Comments (displaying chronologically) Post a comment
Posted by wings io  on  11/08  at  02:56 AM

Yes, the article I was looking for. Your article gives me another approach on the subject. I hope to read more articles from you.
wings io








Supply Chain Logo
Supply Chain 24/7 is the ul­ti­mate online bus­i­ness re­source for Trans­por­ta­tion, Dis­trib­u­tion, Log­istics and Supply Chain pro­fes­sionals.
About Us
Contact Us
Advertise
Privacy Policy
Newsletters
RSS


Follow Us


©2017 SupplyChain247.com is owned and produced by Peerless Media, LLC., a Division of EH Publishing, Inc. All rights reserved.