Qualcomm shares spike on reports of planned Broadcom bid

Qualcomm shares spike on reports of planned Broadcom bid

Analysts have spent the last 24 hours speculating that one reason Broadcom is moving its headquarters to the US from Singapore is that it makes USA acquisitions easier.

Qualcomm in July posted $5.4 billion in revenue in the previous quarter, down 11% year over year, and income fell a whopping 40% due primarily to a patent battle with Apple that began in January and continues to rage. Broadcom, created in 2016 when Avago Technologies Ltd. acquired Broadcom Corp. for $37 billion, has built itself from a former Hewlett Packard division into one of the largest chipmakers via a string of purchases. The company already lists San Jose, California, as a corporate co-headquarters.

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Qualcomm, an early pioneer in mobile phone chips, supplies so-called modem chips to phone makers such as Apple, Samsung and LG that help the phones connect to wireless data networks.

Qulacomm has announced a $47 billion acquisition of Dutch rival NXP, a deal which is the subject of an European Union antitrust inquiry. Broadcom also supplies is a major supplier of parts for Apple's iPhone, and new management might be better positioned to resolve the dispute, Bloomberg noted.

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The only other major supplier of high-end chips is Intel Corp, which supplies about half of the modem chips in Apple's iPhones.

With its profits plummeted more than 90 percent in the latest earnings call, Qualcomm could be fighting a losing legal battle with Apple, giving Broadcom the ideal opportunity to acquire the chipmaker in what could be the largest chip business acquisition ever. The offer of about $70 a share would include cash and stock and is likely to be made in the coming days, the people said. Broadcom's plan to move its home address to the USA from Singapore would free its $5.5 billion deal for US network provider Brocade Communications Systems from a review by the Committee on Foreign Investment in the United States.

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Qualcomm faces a multinational legal battle with Apple Inc over Qualcomm's licensing terms to Apple. The news outlet also noted that the stock of Qualcomm went up 14 percent following the news, which is the largest stock movement for the company in almost a decade.

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