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    It Will Be a Long Time Before Broadcom Acquires Qualcomm, If Ever

    An initial reaction to a Broadcom offer to buy Qualcomm in a transaction valued at $105 billion is that the deal has enough enemies to give it less than an even chance of being consummated.

    eWeek’s Wayne Rash refers to reports that Qualcomm thinks it is being undervalued by Broadcom. Of course, $105 billion is an incredible amount of money. Qualcomm, however, clearly thinks that it is worth it — and more. It is everywhere in communications. Most notably, its footprint extends into both Apple and Android products. And that presence is growing: Bloomberg points out that Apple products use mobile payment modules from NXP Semiconductors, which Qualcomm is in the process of acquiring for $47 billion.

    The other side of the coin is that Qualcomm has had a rough go of it lately. It has been a target of lawsuits and has lost Apple as a client for its modems, Rash writes. It is still in that game, since Intel, the current provider to Apple, must pay Qualcomm licensing fees for its patents. Apple has filed suit about those fees.

    The deal may face some stiff resistance in China. Reuters suggests that two issues may causes. One is that there are domestic companies that the government has an interest in encouraging. Keeping Qualcomm weak could be a good strategic move. The related reason is that Qualcomm doesn’t have a good record in the country:

    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.

    The deal indeed faces challenges. Bloomberg says that Qualcomm’s unhappiness with the offer won’t stop the suitor from appealing directly to Qualcomm shareholders. The situation is complex. Broadcom is simultaneously trying to acquire Brocade Communications Systems, though the story says it is facing “regulatory resistance.” Broadcom this week promised President Trump that the company would move its headquarters from Singapore to the United States. That, of course, couldn’t hurt as the company seeks to move though the regulatory obstacle course.

    It’s a complex game. CNBC suggests, for instance, that the legal wrangling between Qualcomm and Apple could go by the wayside if Broadcom, which the story says has “cordial” relations with Cupertino, takes over.

    It is difficult for a deal to be made if one of the two parties is not a willing participant. In addition, there seem to be enough big entities that are uncomfortable about this deal to make it less than an even bet from happening. The Chinese, of course, are influential players. There is also a natural reluctance to have too much power over chips, the lifeblood of any mobile device, in one firm’s control.

    Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at cweinsch@optonline.net and via twitter at @DailyMusicBrk.

    Carl Weinschenk
    Carl Weinschenk
    Carl Weinschenk Carl Weinschenk Carl Weinschenk is a long-time IT and telecom journalist. His coverage areas include the IoT, artificial intelligence, artificial intelligence, drones, 3D printing LTE and 5G, SDN, NFV, net neutrality, municipal broadband, unified communications and business continuity/disaster recovery. Weinschenk has written about wireless and phone companies, cable operators and their vendor ecosystems. He also has written about alternative energy and runs a website, The Daily Music Break, as a hobby.

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