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What is Broadcom, and why is it trying to buy Qualcomm?

What is Broadcom, and why is it trying to buy Qualcomm?


A brief briefing

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Amid its legal battles with Apple and the United States Federal Trade Commission, chipmaker Qualcomm today was offered an unsolicited bid by Broadcom for a $130 billion acquisition. Qualcomm’s brand is often associated with the Snapdragon chips that power gadgets like the Samsung Galaxy S8, LG V30, and Google’s Daydream VR. Consumers are less familiar with the name Broadcom. So what is it, and why is it trying to acquire the troubled chipmaker?

Like Qualcomm, Broadcom is a semiconductor company that manufactures chips and computer components that support smartphones, laptops, data centers, set-top boxes, game consoles, and more. The company also manufactures LEDs, displays, and network / Bluetooth adaptors. Broadcom is considered a rival to Qualcomm; according to Fortune, Qualcomm reports a $22 billion annual sales revenue compared to Broadcom’s $18 billion. In 2016, it was ranked the fifth largest semiconductor vendor in the world by revenue, led by Intel, Samsung Electronics, and Qualcomm as the top three. Broadcom first moved into the top 10 list in 2010; at the time, Qualcomm was ranked ninth.

Broadcom is the fifth largest semiconductor vendor in the world

Despite the more well-known popularity of Qualcomm’s Snapdragon chips, Broadcom chips are also used in gadgets by HTC, Google, and Apple. In 2012, Broadcom collaborated with Nintendo to bring second-screen gaming to the Wii U’s GamePad controller. Most recently, Broadcom is said to be working on a GPS chip that would allow devices to pinpoint a precise location with an accuracy of within 30 centimeters.

Earlier this year, however, Broadcom’s SoC (system-on-a-chip) was found to contain a security vulnerability that allowed hackers to execute a command to take over a device via Wi-Fi. This bug affected all iPhone users on iOS 10 and Google Nexus 5, 6, 6X, and 6P devices. The exploit has since been patched.

With Qualcomm’s share value on the decline since the beginning of this year when Apple launched a lawsuit against the chipmaker, Broadcom is using the opportunity to potentially buy out its competitor to expand its marketshare of the wireless chip business. After rumors of the acquisition offer broke on Friday, Qualcomm shares jumped roughly 3.5 percent to around $65 a share — the highest it’s been since January 2017. Prior to the legal troubles, Qualcomm shares traded above $70 a share.

A day before rumors of the acquisition offer, Broadcom had announced that it was planning to relocate its headquarters from Singapore to the United States.