Any Broadcom-Qualcomm deal could rouse Arm’s arch rival Intel
Experienced technology observers in Cambridge believe that if Broadcom succeeds in its £139 billion bid for Qualcomm a third company in the UK cluster could be dragged into the fall-out – superchip architect Arm.
If Science Park-based Broadcom does hammer Cambridge Business Park-anchored Qualcomm into submission it is thought likely that Arm’s parent SoftBank of Japan would start seriously looking over its shoulder at Intel.
One of its strongest competitors in the processor market, Intel will become reinvigorated in order to combat a newly formed Broadcom-Qualcomm powerhouse with their Arm-based Snapdragon processors.
Intel has already been sensitised by Qualcomm and Microsoft who have been gearing up to port Windows to Arm-based chips thus providing Intel with extra competition in the PC market.
San Diego based Qualcomm in 2015 acquired local hero CSR plc in a deal valued at $2.5bn and is now under offer from Broadcom – once CSR’s biggest competitor.
Hock E Tan the president and CEO of Broadcom has been on a buying spree following the reversal of his Singaporean company Avago Technologies into Broadcom in a 2016 deal valued at $37bn and in which the Broadcom name replaced that of Avago Technologies.
Tan has recognised that, in the current American corporate climate, it has become more difficult for overseas-based companies to acquire US-based companies.
Qualcomm and Broadcom are independently among the top 10 providers of chips in the $300bn, rapidly consolidating semiconductor industry. Tan largely operates in the US where he was educated and has announced that he will move Broadcom’s headquarters to the States which will, of course, help his mission of purchasing further American-based companies.
It is also likely that part of Tan’s thinking is that his proposed purchase of Qualcomm will defuse the current battle between Apple and Qualcomm and thus help his purchase of the larger company to be more attractive to investors.
Like Qualcomm, Broadcom sells Wi-Fi and Bluetooth chips but is missing the chips that are required to power the new 4G and 5G networks. Following the purchase of CSR by Qualcomm, the dynamic duo - Broadcom and Qualcomm together - would have a near monopoly in the supply of Bluetooth, Wi-Fi and cellular modem chips.
Asked about the Broadcom-Qualcomm acquisition, Phil O’Donovan, former co-founder and managing director of CSR, commented that “once companies become publicly quoted it is difficult for them to remain masters of their own destiny.”
He has previously told Business Weekly that he felt CSR may have sold out too soon and too cheaply when it caved to Qualcomm in 2015. Set against the $139bn being mooted in the current deal – it would be the biggest in global technology history – his original reservations would appear well justified.