The chip-making giant just put it all on the table with an offer to buy Qualcomm for a record-breaking $130B. If the deal goes through, it would be the largest acquisition in tech history.
And yet, Qualcomm has taken offense to the offer, believing the record-breaking number actually “undervalues” them as a company.
As the cellular modem in most smartphones, Qualcomm basically has a monopoly on the SoC (System on a Chip) market and, thanks to their ironclad patents, brands that don’t use Qualcomm have to pay up big time.
Even Apple (a company that makes its own SoCs) uses a Qualcomm chip in the iPhone. And when they realized changing modems would mean paying billions of dollars in royalties, Apple sued the company for collecting “extortion-level royalties for technologies they have nothing to do with.”
Upon the news of Broadcom’s offer, Qualcomm’s stock soared 13% — but they’re still entrenched in a massive legal battle with Apple, and if they lose, it could undermine the integrity of the company in a big way.
In other words, maybe they should take the deal before the modem gets too hot.