Published in PC Hardware

China might stall Broadcom and Qualcomm merger talks

by on07 November 2017


Might prevent its own chip moves


A potential mega-merger between chipmaker Broadcom and Qualcomm is pretty unlikely to get much support from the Chinese authorities.

This week Qualcomm warned that the deal was never going to get the nod from antitrust regulators and it seems that Chinese antitrust lawyers agree.

For those who came in late, Broadcom made an unsolicited bid to buy Qualcomm for $103 billion aimed at creating a $200 billion plus behemoth.

But it seems unlikely that the Chinese will play ball unless the new company promises to give it huge amounts of technology so that it can set up its own rivals.

Wendy Yan, Shanghai-based partner at law firm Faegre Baker Daniels, told Reuters that chips are a critical industry for China and Qualcomm has been fined by the Ministry of Commerce (Mofcom) before so it’s on its radar.

Qualcomm agreed to pay a record fine of $975 million in China in 2015 to end a probe into anti-competitive practices related to so called “double dipping” by billing Chinese customers patent royalty fees in addition to charging for the chips.

China wants to develop its own semiconductor industry under local champions such as Tsinghua Unigroup and Fujian Grand Chip Investment to help cut reliance on global operators including Qualcomm and Samsung and Intel.

China chipmaker rivals could also raise concerns about the deal, he added, putting pressure on Mofcom’s Anti-Monopoly Bureau to act to stop it happening.

Another spanner in the works is that Broadcom is trying to buy Brocade Communications and Qualcomm has NXP Semiconductors.

The Chinese approved the Brocade acquisition with conditions earlier this year with after a five month investigation.

But blocking deals would be unusual for Chinese regulators, especially when Chinese companies were not directly involved. Normally it would demand sell-offs and in this case a way for its own companies to get technology to compete.

 

Last modified on 07 November 2017
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