Published in PC Hardware

Press talks up Broadcom’s unlikely Qualcomm takeover

by on08 November 2017

Could set Broadcom against Intel

The business press seems keen to talk up Broadcom’s unlikely Qualcomm takeover and portray it as the best thing since sliced bread.

Reuters ran a rather odd “what if” story this morning claiming that if Broadcom’s unsolicited $103 billion bid for Qualcomm succeeds, it could set up a battle with Intel for dominance in the production of the next generation of communications chips, which will play a vital role in so-called connected cars.

Egil Juliussen, a principal analyst for automotive technology at IHSMarkit, said the amount of chips per car is going to grow dramatically. Chip makers are scrambling to create new mobile networks, the so-called fifth generation, which will link phones as well as cars, drones and even industrial devices such as smart street lights, which count pedestrians and send data to city planners.

Qualcomm is the dominant communications chip maker for mobile phones, but for some reason Reuters thinks that Intel has begun muscling into the space. The reason it thinks that is because half of Apple iPhone modem chips use them. So that is logical, Qualcomm might as well surrender now that Apple refuses to pay for Qualcomm’s superior modem tech and is buying sub-par Intel gear to teach it a lesson.

Qualcomm is also far ahead of anyone else when it comes to 5G networks.

Qualcomm is trying to buy NXP Semiconductors, a maker of automotive chips for “infotainment” system chips to camera systems, for $38 billion. In fact, the logic that a mythical Broadcom/ Qualcomm hybrid would be dominant in the car industry is dependent on this deal going through.

Intel has bought itself into relationships with autonomous car developers thanks to its acquisition of vision system maker Mobileye.

Then comes the “if if” wishful thinking. Broadcom would basically own the majority of the high end components in the smart phone market and they would have a very significant influence on 5G standards, which are paramount as you think about autonomous vehicles” and connected factories, Reuters said.

What the idea is missing is that Qualcomm has all that already and does not need Broadcom for anything. If anything, “if” Broadcom bought Qualcomm it would put both companies on hold for at least year while the integration and restructuring was carried out.

Already regulators are licking their lips at the prospect of taking out another antitrust action against what would be a super-company with too much market dominance. In fact, to get the deal approved, Broadcom would have to pull out of industries where it might dominate too much.

In fact, it is likely that the regulators will make the deal so restrictive that will have no advantage for Broadcom to pursue.

So why does Reuters and the mainstream press have such a hard-on for a deal which is so bad and unlikely to go through? As we have pointed out there is a rather good conspiracy theory that Apple wants to sink Qualcomm and replace it with more amenable administration. Certainly the comment that Intel’s modem deal with Apple was somehow punishing Qualcomm comes straight from the Apple press office and no one who compares the technology would ever make that mistake.


Last modified on 08 November 2017
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