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Broadcom eyes mega-deal for U.S. chip rival Qualcomm

04 November, 2017, 01:26 | Author: Janis Wilson
  • Albert Gea  Reuters

As for Broadcom, its CEO Hock Tan has a huge appetite when it comes to acquisitions and states that he is interested in more deals, which could be halted thanks to the intervention of US regulators since Qualcomm is a USA -based technology company.

Qualcomm reported a plunge in net earnings for the fourth quarter of its fiscal year, to $168 million, or 11 cents per diluted share, compared to $1.6 billion, or $1.07 per diluted share, in the same period in 2016. NXP is one of the largest makers of chips for vehicles and expanding into self-driving technology.

Bloomberg, which was the first to report the news, said Broadcom has yet to make a final decision on the move.

Shares of Qualcomm jumped 12.7 per cent to US$61.81, while Broadcom's stock climbed almost 6 per cent to US$273.63 on Friday afternoon.

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Broadcom, meanwhile, announced it would return its corporate headquarters to the US, in San Jose. It is now incorporated in Singapore and co-headquartered there and in San Jose, California.

It is also possible that Broadcom wishes to purchase Qualcomm so that the legal battle with Apple draws to a close and because the chipset manufacturer could eventually become an industry arm of Apple's supplier. Since then, though, smartphone sales growth has slowed and Intel has succeeded in placing its modems in some iPhone models. Qualcomm and Apple have been embroiled in a dispute over royalties that has landed the two corporations in court. Maybe they were right.

The upward move on Friday was Qualcomm's largest since 2008.

Qulacomm has announced a $47 billion acquisition of Dutch rival NXP, a deal which is the subject of an European Union antitrust inquiry.

And earlier this year, the FTC filed suit against Qualcomm, accusing it of using anticompetitive tactics to "maintain its monopoly" as the dominant vendor of semiconductors for phones and other mobile gadgets. The deal is facing regulatory scrutiny in Europe and opposition from some shareholders including activist hedge fund firm Elliott Management Corp., which has argued the offer undervalues NXP.

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