Broadcom Versus Qualcomm Update

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Jan. 15, 2018, Jan. 15, 2018 – The Broadcom acquiring Qualcomm drama is still dominating the fabless semiconductor back channel. This week I will be at the SEMI ISS Conference with Scott Jones and several hundred high level semiconductor professionals so it will be interesting to hear the hallway chatter. When it was first announced I was in the minority in thinking it will happen and be for the greater good of the semiconductor industry. Now I would say popular opinion is in my favor based on the SemiWiki Poll where more than 10,000 people voted 58-42% in support and the dozens of people I have spoken privately to inside and outside (Wall Street) the ecosystem.

For me this story started at the TSMC 30^th Anniversary celebration in Taipei last October. The keynotes were by Nvidia CEO Jensen Huang, Qualcomm CEO Steve Mollenkopf, ADI CEO Vincent Roche, ARM CEO Simon Segars, Broadcom CEO Hock Tan, ASML CEO Peter Wennink, and Apple COO Jeff Williams. Next was a panel discussion led by Chairman Morris Chang. My takeaway from the event is that Apple, TSMC, and Broadcom are very close partners while Steve Mallenkopf and Qualcomm are on the outside looking in.

Next I see a picture of Hock Tan in the Oval Office with Donald Trump saying, "We are making America home again" after moving the Broadcom HQ back to the United States. Shortly thereafter Broadcom announces a $70 per share acquisition bid for Qualcomm. Qualcomm then issued the standard negative response that was deja vu of the Avago bid for Broadcom which ended in a record $37B acquisition in 2015. Most financial people I spoke with disagree that $70 (a 33% premium) is not a fair bid but we all know it can and will go higher.

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