Update: Later in the day on Monday, March 12, after this story was published, President Trump signed an executive order prohibiting Broadcom from acquiring Qualcomm. The order said, "The proposed takeover of Qualcomm by the Purchaser [Broadcom] is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited."
As chipmaker Broadcom was stepping up its efforts to acquire rival Qualcomm via a hostile takeover, industry giant Intel has been closely watching developments with an eye toward possibly acquiring Broadcom.
Citing unnamed "people familiar with the matter," The Wall Street Journal yesterday reported that should Broadcom appear likely to take over Qualcomm, Intel "could step in with its own offer for Broadcom."
Meanwhile, Broadcom announced today that is has accelerated its timetable for redomiciling its organization from Singapore to the U.S., moving up the date from May 6 to April 3. While the change in headquarters has been in the works since late last year, the earlier date would complete the process before a scheduled vote by Qualcomm shareholders.
The earlier redomiciliation also appears aimed at blunting concerns raised by the U.S. Treasury Department's Committee on Foreign Investment in the U.S. (CFIUS). The committee last week directed Qualcomm to postpone its shareholder meeting so it could investigate the proposed Broadcom takeover to assess whether the deal poses any national security risk.
Broadcom: National Security 'Not a Risk'
In its announcement today about the earlier redomiciliation date, Broadcom said it had always planned to complete the move ahead of a planned merger with Qualcomm.
"In both the definitive merger agreement that Broadcom provided to Qualcomm and in the revised version that Qualcomm sent back to Broadcom on February 26, 2018, one of the closing conditions was that Broadcom redomicile to the U.S., and notably, in neither party's draft was the closing of the proposed acquisition conditioned on CFIUS clearance," the company said in a statement. "In short, U.S. national security concerns are not a risk to closing, as Broadcom never plans to acquire Qualcomm before it completes redomiciliation."
Intel, meanwhile, is preparing to act if the merger appears likely to succeed, according to The Wall Street Journal.
"The revelation that Intel Corp. is considering buying Broadcom Ltd., a company valued at more than $100 billion, shows the depth to which the chip giant feels threatened by a potential tie-up between Broadcom and its rival Qualcomm Inc.," the paper reported yesterday. While Intel is "eager for Broadcom to fail," it could make a play for the company if the merger gained momentum, the Journal said in another report on Friday.
Market Consolidation and 5G Concerns
While Broadcom pursues Qualcomm and Intel waits, Qualcomm has also put a cash offer on the table to acquire another chipmaker, Netherlands-based NXP Semiconductors. On Twitter Friday, Bloomberg presenter Jonathan Ferro called the state of affairs a "Russian doll of chip deals."
A Broadcom-Qualcomm merger would create a new and powerful rival in two areas that Intel is banking on for future revenue growth: smartphone processors and data centers, according to the Journal. Consolidation in the mobile chip market could also have significant ramifications for smartphone buyers.
"Get ready for the $2,000 smartphone in a world where chipmaking is dominated mostly by one company," a report on the investor site TheStreet warned in November.
And a chip industry merger featuring a company currently headquartered in Singapore raises concerns about "Chinese influence," a report in LightReading noted today. " Underpinning that is concern about China's growing competitiveness in areas such as 5G and artificial intelligence, which are set to become increasingly important in the next few years," the publication reported.