There’s Always a Bigger Fish (Premium)

As I'm sure you know, Broadcom last year launched a hostile takeover bid for Qualcomm. But now Broadcom is the potential target of a takeover bid too.

And with that, the hunter becomes the hunted. Well. Maybe.

In the unlikely event that you're unaware of the forces threatening to completely recast the mobile personal technology market, here's a quick recap. Qualcomm currently dominates the mobile chipset market, in particular, the mobile microprocessor (really system on a chip, or SoC) market. In the fourth quarter of 2017, Qualcomm accounted for almost 45 percent of all SoC shipments, over double the volume of its nearest competitor, Apple, and four times the volume of Samsung. Put simply, Qualcomm is to the mobile devices market what Intel is to the PC market.

2017 should have ended on a high note for Qualcomm, given this dominance. But late in the year, Broadcom---a semiconductor firm that once played a much bigger role in the industry and has been involved in various patent-related legal battles with Qualcomm---announced that it would like to acquire Qualcomm. It would do so normally, with the support of Qualcomm's board and shareholders. But it would resort to a hostile takeover attempt if it needed to.

Broadcom's offer for Qualcomm---about $117 billion as of this writing---would result in one of the largest technology acquisitions of all time. And Qualcomm has done everything it can to fend off the Broadcom bid. As I noted in Short Takes, it recently petitioned the U.S. government to block the takeover by claiming that Broadcom, which is based in Singapore, was a national security risk. The strategy has worked, at least temporarily, with the Committee on Foreign Investment in the United States (CFIUS) this week ordering a national security review of the bid and delaying Qualcomm's annual shareholder meeting---during which shareholders could have voted to approve the takeover---by 30 days.

Political concerns notwithstanding, the impact that Broadcom acquiring Qualcomm would have on the industry is terrifying to consider. Qualcomm is on the verge of entering the PC market and potentially disrupting Intel's dominant position there. And it aims to be a major player in the 5G wireless generation, which will disrupt communications in ways that are still hard to fathom today. Broadcom is the worst thing that's ever happened to Qualcomm. But it's the best thing that ever happened to Qualcomm's competitors. Companies like Apple, Huawei, and, yes, Intel.

So we're pretty much at the point where governmental intervention may be the only thing that can save Qualcomm from a terrible fate.

And then this happened: The Wall Street Journal reported on Friday that Intel---yes, Intel---is "considering a range of acquisition alternatives in reaction to Broadcom's hostile pursuit for Qualcomm." And those alternatives include a bid for Broadcom, according to people familiar with the matter.

That's right. Intel might buy Broadcom. To...