According to a report from Bloomberg, chipmaker Broadcom is launching an ambitious campaign to acquire Qualcomm, best known as the default System on a Chip (SoC) and cellular modem vendor in most smartphones.
Broadcom has reportedly made an unsolicited offer to buy Qualcomm in a deal valued at $130 billion, which, if it succeeds, would be the largest acquisition in tech history.
It’s not a done deal, however. Qualcomm apparently isn’t happy with the offer, with Bloomberg saying that Qualcomm thinks the deal “undervalues the company.” Publicly, Qualcomm has only said it is “evaluating” the deal.
Qualcomm is best known for its near-monopoly on the high-end smartphone SoC market, with its “Snapdragon” line of chips.
At its heart, any Android phone worth talking about has a Qualcomm SoC, which combines the CPU, GPU, RAM, cellular modem, and other components into a single chip. Qualcomm gained this near-monopoly on the back of its 3G CDMA patents, which Sprint and Verizon rely on for network connectivity. When buying a Qualcomm SoC, you get an integrated Qualcomm modem, covering Qualcomm’s patent portfolio, while saving space and power thanks to the on-chip solution.
If you use a non-Qualcomm SoC, you generally need a separate modem, which is less power- and space-efficient than a single-chip solution.
And if you don’t use a Qualcomm modem, you also owe the company hefty royalties.
By leveraging its cellular patents, Qualcomm made its SoCs the path of least resistance for OEMs.
The chips offer superior performance for a lower price while locking out their competition.
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