The ongoing battle between Qualcomm and Broadcom continues to intensify, with both companies engaging in a high-stakes war for control. In the lead-up to the Christmas holiday, Qualcomm made a bold move by refusing to appoint any of the 11 director candidates proposed by Broadcom for its annual general meeting on March 6, 2018. Instead, the company is pushing for the re-election of its current board members. While this conflict seems like a back-and-forth game between the two chip giants, Apple could play a pivotal role in shaping the outcome. The prolonged patent dispute between Apple and Qualcomm may cause shareholder frustration, potentially influencing the final decision.
Since early November, the tension around Broadcom’s bid to acquire Qualcomm has escalated. After Broadcom initially offered $130 billion—factoring in debt—and was rejected, it took a more aggressive step in early December by nominating 11 new board members in an attempt to replace Qualcomm's entire board. This marked the first real move toward a hostile takeover. Faced with such pressure, Qualcomm once again refused to comply, signaling its determination to maintain independence.
According to Reuters, on December 22, Qualcomm officially rejected the 11 directors proposed by Broadcom and private equity firm SilverLake Partners. This marked the second time Qualcomm had turned down Broadcom’s acquisition attempt, highlighting the deepening rivalry between the two semiconductor leaders.
**Is this a malicious acquisition?**
One of the key reasons behind Qualcomm’s rejection is valuation concerns. CEO Steve Mollenkopf argued that no other company can match Qualcomm’s expertise in mobile, IoT, automotive, edge computing, and networking. He emphasized that Qualcomm continues to grow in these promising sectors and leads the transition to 5G. “We have the ability to create significant value for our shareholders,†he said, pointing out that the company remains a leader in the evolving tech landscape.
Qualcomm stated that its board and management are committed to maximizing shareholder value. After consulting with financial and legal advisors, the board concluded that Broadcom’s offer significantly undervalued the company and created regulatory uncertainty. Despite this, Broadcom is reportedly considering increasing its bid through bond financing, keeping the possibility of a higher offer open.
In addition to negotiation tactics, a hostile takeover remains a strong possibility. A hostile takeover occurs when one company attempts to acquire another without the target company’s approval. It often involves aggressive strategies from the acquiring side, including direct offers to shareholders or purchasing shares at a premium to gain control. Given the current standoff, Qualcomm is expected to launch robust defensive measures soon, setting the stage for a fierce corporate battle.
**Qualcomm’s potential should not be underestimated**
Market analysts believe that Broadcom’s interest in acquiring Qualcomm stems from the latter’s struggles under increasing regulatory scrutiny and technological shifts. Once dominant in the 3G era, Qualcomm faced challenges in the 4G era and now faces even tougher competition in the emerging 5G market.
Qualcomm’s recent quarterly earnings report revealed a troubling trend. On November 2, the company reported a 5% year-on-year drop in revenue to $5.9 billion, with net profit plummeting by 89% to just $200 million. These figures highlight the strain caused by ongoing patent disputes, particularly with Apple, which has filed lawsuits in multiple countries.
Apple’s legal actions against Qualcomm, along with counter-lawsuits from Qualcomm, have further complicated the situation. The financial burden of these disputes is evident in the $25 billion net debt associated with Broadcom’s initial offer.
Despite these challenges, Qualcomm maintains confidence in its long-term vision. The company claims that no other firm can match its capabilities in targeting key markets like mobile, IoT, and 5G. Its chips, such as the 820A, integrate advanced features like 5G communication, neural network processing, GPS, and more—all critical for the future of autonomous vehicles.
Industry experts, like Tang Rui of Automated Innovative Enterprise, note that while NVIDIA has been making waves with its innovations, Qualcomm still holds a strong position in low-power embedded systems. “Qualcomm’s chips excel in complex, energy-efficient applications, making them ideal for the next generation of smart cars,†he said.
**Qualcomm rejects Broadcom’s $130 billion takeover offer, calling it undervalued**
Recently, it was confirmed that Broadcom plans to acquire Qualcomm for $130 billion. However, Qualcomm officially responded by rejecting the proposal. The company stated that the offer failed to recognize its strengths in mobile technology and future growth opportunities.
Broadcom, in turn, warned that if Qualcomm refuses, it may proceed with a hostile takeover. While Qualcomm is currently facing financial headwinds—especially due to the Apple patent dispute—it still holds a unique position in the semiconductor industry.
With its established presence in mobile and 5G, Qualcomm remains a key player. If its financial performance continues to decline, and its stock price follows suit, there could be growing pressure on the board during the upcoming shareholders’ meeting. At that point, Broadcom’s renewed $130 billion offer might gain more support, potentially leading to a successful acquisition.
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