
Broadcom Offers $105B for Qualcomm in Landmark Deal - adventured
https://www.bloomberg.com/news/articles/2017-11-06/broadcom-offers-130-billion-for-qualcomm-in-landmark-tech-deal
======
jakozaur
Any reasonable antitrust regulation should kill it:
[https://www.economist.com/news/finance-and-
economics/2172555...](https://www.economist.com/news/finance-and-
economics/21725552-new-research-suggests-too-little-competition-deters-
investment-americas)

Unfortunately they let those mergers happen:
[https://www.economist.com/news/business/21679810-frenzy-
deal...](https://www.economist.com/news/business/21679810-frenzy-deals-
awakening-americas-antitrust-regulators-pushing-limits)

Shareholders benefit at the expense of everybody else (customers, employees,
...). Classical capital vs. labour dillema.

~~~
dsharlet
This is probably why Broadcom is pulling it's HQ move from Singapore to the US
stunt right now. It buys favor with Trump, who appears to operate entirely
based on favor and image rather than the rule of law.

~~~
eldavido
Side effect of too much executive power. It's problematic that this is even
possible.

~~~
ethbro
The alternatives in the US are the judicial and legislative branches.

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microcolonel
It's mighty weird to think of Broadcom as capable of buying Qualcomm. It'll be
interesting to see if RISC-V activity increases after a merger like this. NXP
has been a member, Qualcomm has been a member..

I don't think this really fundamentally changes the availability devices, or
their leverage on the market (aside from Qualcomm's maneuvering becoming part
of Broadcom's activities). I don't see why people in here are calling for
regulatory involvement. This does not form any more of a monopoly than there
already has been (on part of Qualcomm being basically being the sole enabler
of LTE).

~~~
phkahler
I'm glad you mentioned RISC-V. Even if that doesn't displace ARM or x86, it
means every company can have their own CPU designs (RISC-V makes CPUs a
commodity). That means the only remaining IP blocks of high value are graphics
and wireless. Every other part of a SoC is either available or easy enough to
develop in-house. Got that? Graphics IP will keep a company profitable for the
next 5-10 years, and both these companies have basic graphics capability.
Wireless will keep pretty much THESE TWO companies profitable for the next 20
years. Their merger would result in just one company that could build a
complete phone on a chip without licensing much - if anything - from outside.

~~~
khuey
ARM basically made CPUs a commodity and Apple is still killing it by designing
their own best-in-class version so I wouldn't be so sure about RISC-V.

~~~
microcolonel
Apple refuses to sell their designs on the commodity market, so they can
basically be ignored as a CPU/SoC vendor. Also, for what it's worth, Apple's
CPU designs are not strictly "better" than the competition, they really just
have a different target. Other vendors have more focus on dynamic and idle
power, Apple seems to care a lot about single-core top line throughput.

That said, if you look at the way applications for Watch OS are submitted,
you'll note that the submission format is LLVM bitcode, not machine code. This
seems like an obvious and direct statement that they are willing to drop ARM
at any moment for the Apple Watch. Something similar could (probably) be done
for iOS.

~~~
Analemma_
> Other vendors have more focus on dynamic and idle power, Apple seems to care
> a lot about single-core top line throughput.

If that's true, it's actually _more_ embarrassing for the other vendors, since
iPhones get comparable battery life to Android phones with batteries half the
size.

~~~
mjevans
Apples and oranges. The Apple phones get better battery life because of
stricter app store inclusion rules and native binary builds for all targets
instead of generic automated ports.

Plus the rest of the materials BoM on the phones probably cherry picks parts
that are very efficient and tuned to work well with each other.

Why aren't Androids in this same boat? My guess is that it's because Samsung
wants to release 10 different Galaxy phones a year to have something new and
shiny in every product segment instead of focusing on one REALLY polished
design and leaving last year's model for their mid/low end.

~~~
Steko
> Apple phones get better battery life because of stricter app store inclusion
> rules and native binary builds for all targets instead of generic automated
> ports.

Apple does just as well in comparisons that only measure the first party
browser.

Apple wins in battery life because they sell $900+ phones and invest large
sums in engineering specialized chips while Qualcomm doesn't sell phones, they
sell chips to customers whose main concern is price.

------
airesQ
What a crazy turn of events. After all this M&A activity, Avago, a virtually
unknown company, might end up owning Broadcom, Qualcomm, NXP and Freescale.

How is this even possible? Who is financing these guys?

~~~
adventured
How is Avago virtually unknown?

They derive from HP and Agilent Technologies, along with LSI. Pieced together
originally by KKR & Silver Lake. Realistically it's a half century old entity.
They then moved the corporation official seat to Singapore for various
strategic reasons.

~~~
airesQ
Calling Avago "virtually unknown" might have been too dismissive from my part.

But lets consider 2013. Avago had a revenue of $2.5bn, respectable, but that's
not much when compared with Qualcomm's $24.9bn, less than Broadcom's $8.3bn,
NXP's $4.8bn, and Freescale's $4.1bn.

In fact it seems that at least when it came to revenues, Avago was the
smallest company on that list.

~~~
skinnymuch
Pretty cool to see those revenue numbers. I assumed Avago would have been
bigger revenue wise than NXP and Freescale (even with assuming you're using
2016 not 2013 revenue for them)

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TorKlingberg
Interesting. All this consolidation in chip makers is going to hurt downstream
device manufacturers. Apple and Samsung must be racing to make all the chips
themselves before the Broadcom-Qualcomm giant can put the squeeze on them.

By the way, Broadcom's market cap is only $112B, so this must be either a
highly leveraged buyout, or more of a merger in practice.

~~~
ksec
Apple is already making their own WiFi and Bluetooth Chip. And this will have
happen whether these chips maker were consolidating or not. As a matter of
fact, arguably it is because Apple making their own chips, the most luxurious
piece of market is gone, and they will have to consolidate to survive.

~~~
tooltalk
Apple would still have to pay Qualcomm, Nokia, Ericsson and other wireless
patent holders whether they make their own chips or not. While Qualcomm's chip
sales (QCT) isn't small, most of their profit comes from licensing (QTL).

~~~
mattnewton
Apple is working hard to pay the minimum amount possible to Qualcomm through
lawsuits and exploring shopping more parts from Intel. It remains to be seen
how that will pan out, but it has certainly caused enough analysts to price
down their stock considerably lately.

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snarfy
When you look at the iPhone X teardown [1], you can see a number of custom
Apple chips. And then you scroll down and see the Broadcom and Qualcomm chips
that implement mostly the radio stack. What's to say those won't be Apple
chips in the future?

[1] -
[https://www.ifixit.com/Teardown/iPhone+X+Teardown/98975#s182...](https://www.ifixit.com/Teardown/iPhone+X+Teardown/98975#s182886)

~~~
qaq
Broadcom and Qualcomm own significant patent portfolios covering things Apple
would need to produce their own chips

~~~
snarfy
This is true today but doesn't have to be in the future. Technologies change.
Patents expire. There will be a 6g after 5g. I'm not sure who will own the
patents on it. Most likely one of those two companies for sure, but you never
know. Apple could invest the R&D and come up with something much better than
we have today, and we all end up with Apple radio chips in our phones instead
of Qualcomm.

~~~
j605
Qualcom and Broadcom create prototypes even before standards are finalized so
it is very difficult for an outsider to get in the game.

~~~
dmitriid
Apple created it's own 64-bit ARM chip before the specification was ready.

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khuey
This seems like the sort of thing antitrust regulators should take a long hard
look at.

------
jhallenworld
Avago is acting like some kind of corporate raider: the only reason they had
the money to buy Broadcom was huge bank loans:

[https://www.reuters.com/article/us-avago-
acquisition/avago-t...](https://www.reuters.com/article/us-avago-
acquisition/avago-taps-five-banks-for-broadcom-acquisition-loan-
idUSKBN0OL1HR20150605)

~~~
wyldfire
Return of the LBO?

~~~
baybal2
In much more crude form.

What Hock Tan does is he gets ridiculous leverage, find near monopolist
companies to buy, buys them, then quickly pays off debts by selling off almost
everything from acquisition targets except for things needed to maintain that
monopoly status.

Nothing smart in this scheme

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Evansbee
Is it strange that Broadcom cut a deal to move HQ back the US at the same time
it's buying a US-based company that would give it a near monopoly in the
industry?

[https://twitter.com/realDonaldTrump/status/92617682311707443...](https://twitter.com/realDonaldTrump/status/926176823117074433)

------
shmerl
Is Broadcom generally better than Qualcomm? The later is a really nasty
company known for patent trolling and attacks on free codecs.

While normally this would probably mean less competition, buying out an
obnoxious patent troll for patent disarmament can actually be a good thing.

~~~
maze-le
For me at least, when it comes to laptops, a Broadcom-WiFi-Chipset is a
critical factor in the purchase decision (as a 'DONT BUY!'). In the past Open
Source drivers for 'Broadcom' were totally lacking. By now there are the
brcm80211[0] drivers, wich kind of work, if you are lucky. With my last 2
laptops I wasnt so lucky, I still encountered constant disconnects and kernel-
driver errors when working with them. The alternative was to use the reverse
engineered 'b43'-driver wich kind of worked but never to my full satisfaction.

I don't really know about 'patent trolling' on Broadcoms side, but these
driver issues were enough for me to say: never again broadcom, when you want
to use it with linux.

[0]:
[https://wiki.archlinux.org/index.php/broadcom_wireless#brcm8...](https://wiki.archlinux.org/index.php/broadcom_wireless#brcm80211)

~~~
shmerl
On Linux, Intel WiFi drivers are by far the best I think. I wouldn't use
anything else at least, because of the past experiences.

~~~
jabl
If you're satisfied with 802.11n then ath9k is IMHO the best. Only driver that
does not require a magic firmware blob, and has all the bufferbloat reduction
features.

~~~
davidfischer
For the record, Atheros is a subsidiary of Qualcomm.

Edit: wrong preposition

~~~
jabl
Yes, but Atheros was acquired by Qualcomm much later than the release of ath9k
(2011 and 2008, respectively).

~~~
davidfischer
True.

------
awill
The only reason Qualcomm is cheap enough for Broadcom to purchase is because
of Qualcomm's disastrous SD810 chips that ruined many flagship devices in
2015. And that's all because they had to rush to the 64-bit market to chase
Apple. So really, Apple is the cause of this (j/k)

------
tytso
It's funny how people say that Qualcomm was founded by engineers, since given
they way they have acted in recent years, I had always assumed that they had
been founded by lawyers.

I know Broadcom is no prize, but given that Qualcomm has laid off all of their
kernel engineers working on the upstream kernel, and given the "quality" of
their BSP kernels I have had the displeasure to have to work with (hint: one
way to tell that your drivers are not upstreamable is when your BSP kernel
doesn't even _build_ on x86), speaking purely personally, it's hard for me to
shed a tear for Qualcomm....

~~~
martin1975
Yes, it was. If you're talking about Irwin Jacobs, Andrew Viterbi, Franklin
Antonio - yes, these were/are true, hardcore engineers at heart.... that was
the impetus and backbone of Qualcomm. Everything that follows is the effects,
which are far less interesting than its beginnings.

~~~
tytso
At many companies, the Founders push their biases into company culture so
strongly that it stays for a long time. For example, my sister (who is an
accountant, although now she's a director in the Finance and Auditing
department) works at a company in the insurance industry that was founded by
folks in Sales --- and it shows. Previously, she worked at Motorola, and that
was clearly run by engineers. HP and Digital Equipment Corporation are also
companies which have their engineering founders bias engrained into corporate
culture for a long time. Although HP's more recent CEO's have not been
engineers (for example Fiorina was a salesperson, and look what she did to
that company).

But Qualcomm certainly seems to behave as if the Lawyers dictate all of their
decisions, which has made me wonder if at least one of their founders was a
lawyer.

------
UseStrict
Rarely is it a good thing for the market when two behemoths merge. I hope
regulators pay attention and don't just rubber stamp this.

------
LaSombra
My pet theory is that Apple is helping Broadcom since they apparently have a
better relationship with Broadcom than Qualcomm.

~~~
ksec
Given there is Apple's money in both Western Digital and Bain Capital in the
bid for Toshiba's NAND business. My guess is this take over will similarly
have Apple's money in it as well.

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ckcameron
Broadcom's previous aquisitions have not greatly benefited the hardware
market. As a company they seem to be purchasing hardware manufacturers and the
pace of advancement and quality of support then drops off a cliff for the
acquired products. A good example of this is the LSI/Avago aquisition.
Innovation in storage controllers had showered, the new Broadcom NVMe RAiD and
HBA controllers offer very little change, and are more just a representation
of existing technologies in combination.

Qualcomm had been fairly aggressive in it's developments and the overall
quality of hardware in the mobile market has improved greatly because of it.
Arguably, the ability of ARM to potentially unseat x86 as the supreme
architecture is because of Apple and Broadcom's and rapid advancement of their
chips. I don't Broadcom would offer us the same.

~~~
sliverstorm
_just a representation of existing technologies in combination_

I don't shop in those markets, but combining existing technologies into one
product can be a step in the march forward.

See the integration of the memory controller, northbridge, video codecs, and
so forth into the CPU SoC. No one integration blew the doors of, but helped
pave the way to the fast, low-power chips we have today.

------
qaq
Does not look good for mobile phone manufacturers if it goes through

~~~
ac29
I wonder if this would push Google to move into the smartphone SoC business,
perhaps in collaboration with Intel, who already makes a NN processor in the
new Pixel, an LTE modem for some recent iPhones, and obviously has CPU/GPU
experience in x86 (and could probably design and fab a pretty competitive ARM
core if they wanted to).

Google has the cash to do this, and their recent acquisition of HTC
engineering talent suggests they are serious about pushing forwards as a high-
end smartphone maker.

edit: Given more thought, I wonder if Google was already headed down this
track. This mega-merger would only be additional incentive.

~~~
TheGrassyKnoll
How'd that $13 billion Motorola buy work out for them ?

~~~
qaq
Great they mostly cared about patent portfolio the rest of Motorola was just a
side bonus

------
wiineeth
Good that samsung started making their own SOC, Mobile manufacturers should
shift from qualcomm worldwide. They have almost monopoly in mobile SOC now. US
and china are the only markets which require qualcomm patents to work. Mobile
operators should move away from cdma. need more competition.

------
josteink
So even _less_ competition in this space? Sounds great!

------
phr4ts
This reminds me of Porsche vs. Volkswagen

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pfooti
i only hope they end up named comcomm

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abakker
How’s this for a new M+A regulation: make it illegal to increase the size of a
patent portfolio by m+A. Not to say you couldn’t keep their patents, but that
the total number of patents owned by the new company couldn’t be any larger
than the larger of the two companies.

If the M+A causes the divestiture of even a significant number of low value
patents, it could mitigate some harm.

~~~
logfromblammo
That would likely have the unintended consequence of spinning off a lot of new
non-practicing entities with a large number of low-value patents in their
portfolios.

Are you _sure_ that's what you want? Those companies are more commonly known
as "patent trolls".

~~~
abakker
The optimist in me says that if you make the problem bad enough, we might
actually get around to fixing it. Or, maybe instead of NPEs, it will be Native
American tribes.

On second thought, let’s fix antitrust legislation and enforcement.

------
shimon_e
Who thinks Trump knew about this when he announced Broadcom will be relocating
back to the USA.

------
dis-sys
"Qualcomm is preparing to fend off the unsolicited offer, arguing it
undervalues the company, people familiar with the plans have said. Qualcomm
will argue that the proposal is an opportunistic move to buy the chipmaker on
the cheap, the people said, and it will likely recommend that shareholders
reject it."

------
mtgx
Qualcomm is feeling guilty over its anti-trust violations, just like multiple
governments have found it to be. This is why its investors/board members want
to get rid of it. I would hope that if Broadcom acquires them it also cleans
house of Qualcomm's leaders and board.

------
baybal2
A mouse tries to swallow an elephant

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PatientTrades
Even at $105B this would be a bad deal for Qualcomm and its shareholders. Long
term Qualcomm will be worth probably double that offer in the next 20-25 years
if current trends continue. Cashing out now would be very a short sighted move
for shareholders

~~~
yeldarb
Doubling in 20 years is only a 3.5% rate of return. That’s not great.

~~~
newusertoday
right now they are also paying dividend worth ~3% assuming they keep on doing
this it would be 6.5% not bad..

