How to Think about Broadcom's Proposed Qualcomm Acquisition

Broadcom (News - Alert) has always been an interesting company to watch, although it has sometimes been frustrating. It sold off most of its IoT-applicable assets in the past, and some have suggested that IoT is the rationale for acquiring Qualcomm.

That may have some truth, but there is more that should be considered.

The first is the proposed split of Qualcomm’s intellectual property from the silica side of the business. In effect this would have made a competitor to ARM in terms of licensing cellular solutions.

Through Broadcom buying Qualcomm, that decision can either be forced or ignored. Personally I think it will be ignored, because I think there is much to explore in solutions that Qualcomm has yet to monetize.

Additionally, I think Qualcomm has some advantages in spectrum management that have yet to be truly explored.

Particularly, I think Time Division Duplexing [TDD] has some advantages that fit nicely into Industrial Internet. In addition Broadcom has a strong history of enterprise solutions.

It may be that Content is king for this acquisition, and particularly 5G delivery of content. I say this because one place that Broadcom has maintained its assets is in servicing the broadcast industry. The company might be seeing an opportunity to either expand the networks with broadcast carriers using 5G themselves or being partners in promoting new solutions in the 4K meets 5G markets.

Regardless, I doubt that Qualcomm will have only one suitor. We will see where the future takes them, but I expect they will choose to be acquired in the near future.

Side Note: It may be that the acquisition of Qualcomm has more to do with Broadcom’s returning their HQ tax status to the US than President Trump’s Tax Reform.