The American communications chipmaker Broadcom Ltd is expected to soon unveil a bid for the country fellow smartphone chip company Qualcomm Inc. The rumored Broadcom-Qualcomm deal could be the biggest technology acquisition ever, estimated to be around $100 billion.
A mashup would combine two of the largest makers of wireless communications chips for mobile phones and raises the stakes for Intel Corp, which has been diversifying into smartphone technology from its stronghold in computers.
The worth of Broadcom’s bid has not been disclosed, though an offer in the range of around $70 to $80 per share is being contemplated, one of the sources said. At $70 a share, an offer would value Qualcomm at $103 billion. Qualcomm is still unaware of the details of Broadcom’s bid, and it is far from certain whether it will entertain this deal, the sources said.
“It’s a smart move that would make Broadcom into a tech juggernaut,” said GBH Insights analyst Daniel Ives.
According to The Verge, Broadcom proposes record-breaking $130 billion bid for rival Qualcomm.
However, Qualcomm refused to comment, while Broadcom did not immediately respond to a request for comment.
Broadcom’s acquisition would be the most ambitious move by Tan, who has progressed a small, scrappy chipmaker into a $100-billion company with a chain of deals since he took the helm a decade ago.
The proposal comes as Qualcomm is trying to close its pending $38-billion acquisition of NXP Semiconductors NV. NXP is one of the largest makers of chips for vehicles and expanding into self-driving technology, and Broadcom also is open to acquiring NXP, according to one of the sources.
Antitrust officials, who also would have to approve a Broadcom-Qualcomm deal, are still considering Qualcomm’s purchase of NXP. Activist investor Elliott Management Corp has taken a large stake in NXP and has been pushing for Qualcomm to pay a higher price for the company, Reuters has reported.
Qualcomm was the initial pioneer in mobile phone chips, supplies so-called modem chips to phone makers such as Apple, Samsung, and LG that help the phones connect to wireless data networks. On the other hand, Broadcom is also a major supplier to many of the same companies for Wi-Fi chips.
Broadcom’s Wi-Fi chips are basically a commodity and priced much lower than the modem chips.
Other than this duo, the only other major supplier of high-end chips is Intel Corp, which supplies about half of the modem chips in Apple’s iPhones. Purchasing Qualcomm would give Broadcom a much more lucrative line of business in the mobile phone markets. Intel shares fell 1.6% to $46.34.
Broadcom is considering a cash and stock offer of about $70 a share, Bloomberg reported earlier.