Broadcom attempting takeover of Qualcomm

Offer is $103 billion; transaction between rival chipmakers would raise antitrust concerns

NEW YORK» Broadcom made an unsolicited, $103 billion offer for rival chipmaker Qualcomm, the tech industry’s largest attempted takeover that is destined to come under intense regulatory scrutiny.

Both companies have operations in Colorado.

San Diego-based Qualcomm, known to consumers as the maker of Snapdragon chips found in smartphones and tablets, is already the No. 3 chip supplier, according to research firm Gartner, trailing Intel and Samsung. A combination with Broadcom, which has corporate headquarters in San Jose, Calif., but a home address in Singapore, would not change that.

But a transaction between the two would likely raise antitrust concerns, analysts said. The combined company would have about 40 percent of the cellphone chip market, said Stifel analyst Kevin Cassidy. Moreover, it would create a company with “massive market share” in the kind of chips that power Wi-Fi, location data and Bluetooth, necessary for the next generation of connected devices, said Stuart Carlaw, chief research officer at ABI Research. That could make it more expensive to incorporate such technologies in new areas, such as electric-car infrastructure and “smart” utility grids, slowing their development, he said.

Broadcom is the product of a $37 billion combination in 2016 between Avago, a Singapore-based company that was once part of a former unit of pioneering PC maker Hewlett-Packard, and Broadcom, another company with origins in Southern California that made chips for tablets, smartphones and other telecom and cable applications.

Before the merger, Avago employed about 1,300 people in Fort Collins. Broadcom also had operations in the city. Today, Broadcom employs about 1,245 people, according to David May, president of the Fort Collins Area Chamber of Commerce.

Broadcom said in its annual report in October 2016 that it continued to “add manufacturing capacity at our Fort Collins facility to support anticipated growth in sales of our proprietary products, particularly for our wireless communications segment,” the filing stated.

Broadcom said it employed 15,700 people worldwide at that time. The company also terminated 3,500 employees as part of the merger.

Qualcomm, which employed 33,800 in September, has had operations in Boulder since 1991, according to the company’s site. The Boulder team employs engineers who

work on wireless technologies, such as LTE and 5G. Its Boulder site includes a large complex on Spine Road near the Diagonal Highway.

Qualcomm said in 2013 it employed 378 people in the region. Two years ago, Qualcomm cut 158 people in Longmont as part of a companywide restructuring. Last year, it sold off its Gunbarrel facility to Etkin Johnson Real Estate Partners after the downsizing, according to the Daily Camera of Boulder.

Broadcom said Monday that it was confident that “common global customers” would “embrace” the proposed deal. While it did not specify particular companies, Qualcomm and Apple have been in a long-running legal battle over licensing fees owed to Qualcomm.

Analysts say that dispute has weighed on Qualcomm’s stock price. Hooking up with Broadcom might lead to a faster resolution of that dispute because of Broadcom’s good relationship with Apple, said Canaccord Genuity analyst Michael Walkley in a Monday note.

Still, analysts expect Qualcomm management to reject the $70-pershare price Broadcom is offering as too low. Qualcomm said that it is reviewing the bid, and that it will have no comment until that review is completed by its board.