Broadcom may acquire Qualcomm amid existential legal battle with Apple

This time the San Diego chipmaker is suing Apple for allegedly sharing proprietary Qualcomm technologies with its market rival, Intel. Qualcomm's stock is down 16 percent this year, excluding the jump prompted by the Broadcom news today, and it suffered a staggering 90 percent drop in profit in its fourth quarter earnings released earlier this week.

Qualcomm (NASDAQ:QCOM) shares are up 5.58% after rumors that Broadcom (NASDAQ:AVGO) is exploring a deal to purchase the chipmaker.

With its profits plummeted more than 90 percent in the latest earnings call, Qualcomm could be fighting a losing legal battle with Apple, giving Broadcom the ideal opportunity to acquire the chipmaker in what could be the largest chip business acquisition ever. Qualcomm, a major supplier of chips for wireless handsets, was up 14 percent.

Assuming Broadcom still decides to move forward with its $100 billion bid of Qualcomm, such a bid would give Broadcom significant leverage over components like Wi-Fi and cellular modem chips.


Broadcom, a major supplier of iPhone parts that counts Apple among its largest customers, said this week it will return its headquarters to the US from Singapore.

A Qualcomm spokeswoman declined to comment.

Reports in The Wall Street Journal and elsewhere say Apple is contemplating kicking Qualcomm out of its devices entirely, possibly replacing it with Intel chips. For one, Qualcomm is in the midst of a legal dispute with Apple, with the dispute having started in January when Apple sued Qualcomm for $1 billion. Well, Qualcomm happens to be in the middle of an ongoing existential crisis perpetuated by a legal showdown with Apple, which has always been a Qualcomm buyer for wireless modems that enable the iPhone to communicate with telecom networks. A legal battle with Apple is costing revenue and jeopardizing a business model that for years made Qualcomm one of the most successful chipmakers.

Both firms have been in the news the last few days.


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