Broadcom-Qualcomm Merger: Semiconductor Shakeup?

Broadcom-Qualcomm Merger: Semiconductor Shakeup?

By The Market Mogul, Nov. 15, 2017

The semiconductor industry has been flush with activity in recent months. There was Broadcom’s bid to buy Qualcomm for $70 per share last week that was flatly rejected by the target’s board.

This could spark a proxy war between the two, which might well punish Qualcomm, whose investors have likely grown restless with its diminished share price following the company’s months-long dispute with Apple.

The merger is not the only news coming out of the industry, however. A consortium led by Bain secured the purchase of Toshiba’s chipmaking business in October. The deal enables troubled Toshiba to shore up its balance sheet and will allow Apple, a member of the consortium, to ease its reliance on third-party chipmakers, which were partly to blame for the iPhone X’s production slowdown.

Foxconn, one of the companies tasked with producing the chips required to process data from the new smartphone’s TrueDepth camera, has taken a beating on the markets for its shortcomings and reported a 39% slide in quarterly profit yesterday.

Meanwhile, legendary chipmaker Morris Chang, who founded Taiwan Semiconductor (TWSC) – which does not make the above list – officially retired late last month. The 86 year-old built his company after realising that chip design was being held back by capex requirements.

Consequently, he built TWSC as a pure chipmaker that built other companies’ designs; in this way, Chang enabled companies such as Nvidia to challenge Intel’s preponderance in the field.

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