Sorry, rich money is what you want.
In recent days, the above sentence quite quite fire, but in the face of the offer of billions of acquisitions offer, Qualcomm refused to external, as if to say: Sorry, rich and can not do whatever they want.
First to do the last love summary: Nov. 6, one of the world's largest semiconductor maker Broadcom malicious offer to Qualcomm, the external said it would be $ 60 per share in cash plus the value of the company's $ 10 acquisition of Qualcomm all Circulating shares. In addition, Broadcom is willing to continue to complete Qualcomm's $ 38 billion acquisition of NXP Semiconductors (NXP Semiconductors) transactions. Together, Broadcom needs to pay more than 130 billion US dollars.
Two days later, Qualcomm said it did receive the takeover offer and said it would be considered in the best interest of the shareholders.
If Broadcom and Qualcomm merge, will become the world's third largest semiconductor company (after Intel and Samsung Electronics). But Qualcomm declined to be acquired. To complete this acquisition, in addition to the parties willingness, but also need to go through the approval of the US government, even if the U.S. government to release, as both companies are huge multinational companies, other major countries and regions whether the review is adopted is a huge variable.
Considered a few days later, Qualcomm said: We do not want this money, Qualcomm are reluctant to be acquired, and feel that by their own strength will be able to create a new round of shareholder value.
Although Qualcomm is already the world's third-largest semiconductor company behind Intel and Samsung Electronics, and has a huge impact in the area of mobile communications chips, including Wi-Fi or baseband chips. But the market seems to be not optimistic about Qualcomm's future.
This is related to Qualcomm's situation.
Qualcomm recently handed over the latest quarterly earnings, net profit fell sharply year-on-year 89.7%, Qualcomm explained the main reason is that Apple and its suppliers did not pay royalties. In the past, when all the Chinese handset manufacturers launched a boycott of Qualcomm, the relationship between Apple and Qualcomm has started to pick up again recently. Both parties have come to litigate with you from all over the world. The core difference between the two sides is that Apple believes that Qualcomm charging too expensive is too unreasonable (because Qualcomm to pumping based on the price of the machine), Qualcomm believes that my product must accept my pricing.
Patent fees do not come in, so Qualcomm's earnings outlook is very hurt.
There was such a data from the Qualcomm fees in other aspects of view, each Apple build an iPhone or data version of the iPad, you need to pay about $ 40 patent license fees. From 2015 onwards, iPhone's annual sales of nearly 200 million units, Apple each year to Qualcomm to pay 8 billion US dollars in patent licensing fees. From the earnings report we can see that Qualcomm's 2016 full year revenue is about 26.5 billion US dollars, which means that about one-third of Qualcomm's annual revenue comes from Apple.
Therefore, the biggest problem with Qualcomm is that although Qualcomm is a chip company on the surface, the fact that it is a patent for communication solutions is the essence of Qualcomm's earnings.
Qualcomm was founded in the beginning, is a communications solutions company. In 1985, Irwin Jacobs, Andrew Viterbi and others formed Qualcomm, and subsequently launched its own exclusive technology, CDMA technology, after the first product, OmniTRACS, a truck positioning system.
In 1990, Qualcomm CDMA technology for the first time used in mobile phones, followed by the shine of this technology, if 2G is still the main GSM era, to the 3G era, Qualcomm's CDMA technology and related patents have become all communication standards around Do not open the absolute basis. Almost all mobile phone manufacturers have to pay Qualcomm royalties.
On the other hand, high-utility patents bring huge revenue to support their own chip projects. In the company's seventh year in 1992, Qualcomm officially started its own chip business. And in the patent revenue support, the chip business has grown stronger.
This one of the business logic is very simple, is the patent exchange rate. High-generic patents authorized profits to carry out chip research and development, and chip sales to handset manufacturers. Anyway, handset manufacturers at any cost to pay Qualcomm royalties, the use of Qualcomm chips can be discounted in the royalties.
On the other hand, for mobile phone manufacturers, Qualcomm is not only a patent provider, but also a huge patent umbrella. Qualcomm also requires handset makers to sign a counter-grant agreement with Qualcomm when it signs a license agreement. To put it simply, that is, handset makers, to apply for their own patents, reverse authorized to Qualcomm, and to give up the other handsets with Qualcomm signed the same agreement the right to sue. For example, if one of the vendors infringes on a patent from another handset maker, as long as both handset makers and Qualcomm have signed a counterauthorization agreement. The two cell phone manufacturers, there will be no related patent litigation.
The seemingly foolproof ecology actually collapsed.
In the 4G era, Qualcomm's patent advantage is no longer as strong as the 3G era, so Qualcomm will use harder business methods to ensure its own revenue, usually using the "bundled" patent "and" according to the proportion of the whole machine price charged Patent fee "way. However, such a model has caused the government dissatisfaction with Qualcomm and antitrust investigations.
Industry rumors that Apple is also stepping up its search for alternatives to Qualcomm, such as the introduction of Intel baseband chips from the previous generation of the iPhone 7.
Chinese mobile phone brands also started to develop mobile phone chips. After the surging S1 chip was released, Xiaomi became the fourth smart phone company with its own chip. In the recent two years, Huawei also relied on the phone with unicorn processor to seize market share and even constantly challenged Apple and Samsung. At this point, the world's top three mobile phone manufacturers Apple, Samsung, Huawei already have their own chips, rookie millet also keep up.
The first few global handset sales vendors are trying to find their own chip solutions, and ov two large sales, although still Qualcomm, but the two vendors seem to be not interested in Qualcomm's flagship chipset, never Are using "enough to use" 6 series of chips, which in fact is to let Qualcomm only tears of money in desperation, because for Qualcomm, the flagship chip's profit is actually the highest.
Qualcomm sat in the past, customers kneeling to seek business cooperation, and now, these customers are basically able to work with Qualcomm, and even able to require Qualcomm according to their own needs to adjust products, custom features.
High-pass lying down making money can not lie down.
Abandoning the takeover means that Qualcomm will need to rediscover its effective profitability and ease the dispute with its customers over patents and still need to further consolidate its patent advantage in next-generation communications technology.
But in fact, Qualcomm's refusal does not make the takeover easy to stop, in contrast to Qualcomm's approval of the takeover. Broadcom so decisive attitude, followed by Broadcom is likely to take a vicious takeover approach to buy shares in the capital market to take the initiative to initiate mergers and acquisitions.
Good show is still behind.