Broadcom Expects 2018 iPhone Sales to Drive ‘Seasonal Uptick’ in Q4 Revenue

Broadcom on Thursday offered analysts an upbeat end-of-year revenue forecast, thanks in part to the imminent launch of Apple's 2018 iPhone lineup, which is expected to boost the chipmaker's wireless business.


Reuters reports that Broadcom predicted current-quarter revenue largely above estimates, due to higher demand for components that power data centers, as well as an increase in manufacturing at a certain "North American customer," which analysts identified as Apple.

The chipmaker expects Apple's smartphone sales to increase its wireless revenue by 25 percent compared to the previous quarter, although the overall forecast may be down in single-digit percentage compared to the previous year.

That said, Broadcom's enterprise storage business was up 70 percent in Q3 2018, and CEO Hock Tan believes that another strong show will feed into a "seasonal uptick" in its wireless arm:
"More than half our consolidated revenue ... is benefiting from strong cloud and enterprise data center spending," Tan said on his post-earnings call with analysts.

"This, coupled with a seasonal uptick in wireless, will drive our forecast revenue in the fourth quarter."
Next week sees Apple launch its new flagship iPhone lineup, for which Broadcom traditionally supplies several components, including the wireless charger controller, touchscreen, and more.

Apple's September 12 event is expected to usher in a next-generation iPhone X, a larger 6.5-inch OLED screen mobile handset, and a mid-tier 6.1-inch device with an LCD display. The date should also see the company debut a new Apple Watch series and redesigned iPad Pro models.


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Trump Prohibits Broadcom’s Takeover of Qualcomm Due to National Security Concerns

United States President Donald Trump this afternoon issued an executive order blocking Broadcom from acquiring Qualcomm in a deal that would have been worth more than $117 billion, reports Bloomberg.

The president's order came following a recommendation from the Committee on Foreign Investment (CFIUS) in the United States, despite Broadcom's efforts to save the proposed transaction over the course of the last few weeks. U.S officials believed Broadcom's acquisition of Qualcomm, which has been under investigation by the CFIUS, could threaten national security.


The CFIUS previously said that a Broadcom acquisition of Qualcomm could undermine Qualcomm's leadership in 5G wireless technology, allowing China's Huawei to become the dominant 5G provider in the world. Broadcom, a Singapore-based company, promised not to sell Qualcomm 5G assets, announced plans to redomicile in the United States, and pledged to invest billions in the United States, but that did not ease regulators' concerns.
"There is credible evidence that leads me to believe that Broadcom Ltd." by acquiring Qualcomm "might take action that threatens to impair the national security of the United States," Trump said in the order released Monday evening in Washington.
Trump also said that "any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited."

Broadcom first made an offer to acquire Qualcomm for $70 per share in cash and stock back in November of 2017, marking the proposal of the "largest technology acquisition ever, which Qualcomm turned down.

Qualcomm also turned down subsequent offers of $121 billion and $117 billion, and had not agreed to the acquisition at the time that it was blocked by Trump. Broadcom had been attempting to add merger-friendly individuals to Qualcomm's board, but today's order makes it clear that no merger or acquisition between the two companies will be allowed.

Broadcom may intend to fight the order as earlier today, the company said in a statement that U.S. national security concerns are not a risk as "Broadcom never plans to acquire Qualcomm before it completes redomiciliation.

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Broadcom Increases Acquisition Offer for Chipmaker Qualcomm to $121 Billion

Broadcom is reportedly moving forward with its attempt to purchase chipmaker Qualcomm, by increasing its bid for the company to about $121 billion and $82 per share, described as a "final offer." The new offer comes three months after Broadcom's first bid for Qualcomm, originally valued at about $105 billion ($70 per share), plus $25 billion of net debt (via Bloomberg).

If the acquisition goes through it would still be considered the "largest-ever technology deal," although Qualcomm's board previously rejected the first offer and is said to have "dug in" against threats of potential hostile takeovers. With the increased offer, Broadcom now hopes to put pressure back on Qualcomm to accept the deal and "improve prospects" for Broadcom CEO Hock Tan to be nominated to Qualcomm's board should the deal go through.


Broadcom Ltd. has raised its bid for Qualcomm Inc. to about $121 billion, in an attempt to force what could be the largest-ever technology deal. The new offer of $82 a Qualcomm share will be Broadcom’s final offer, according to a statement Monday. The deal would take the form of $60 in cash and the remainder in Broadcom shares.

Broadcom’s hostile bid for the larger San Diego-based company is the latest and most audacious move by Tan in a string of deals that have made his company one of the world’s largest suppliers of semiconductors. He wants Qualcomm for its leading smartphone modem chip division, an example of what he calls a “franchise” that will continue to dominate.
If completed, Broadcom would become the third-largest chipmaker in the world, behind Intel and Samsung Electronics, and the combined Broadcom-Qualcomm business would "instantly become" the default provider of certain components required to build more than one billion smartphones sold every year. The acquisition would eclipse Dell's $67 billion purchase of EMC in 2015, considered at the time the biggest in the technology industry.

Qualcomm is said to be pushing back against such acquisition offers because it see its own future to be "much brighter as a standalone company," further stating that it's "on the cusp" of entering new product markets. At the same time, Qualcomm has been in a legal battle with Apple for over a year now, after Apple accused Qualcomm of charging unfair royalties for "technologies they have nothing to do with" and failing to pay for quarterly rebates.

Throughout the lawsuits, Apple eventually considered removing Qualcomm modems from its devices altogether moving forward, and the latest report from KGI Securities analyst Ming-Chi Kuo pointed towards Intel-only modems for the 2018 iPhones.


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Broadcom Offering to Buy Qualcomm in What Would Be the ‘Largest Technology Acquisition Ever’

Following a report last week that stated Broadcom was "exploring" the possibility of buying Qualcomm, which has made LTE chips for Apple's iPhone line for many years, today Bloomberg reports that this offer is moving forward. Broadcom has offered to acquire Qualcomm for $70 per share in cash and stock, in a transaction valued at a total of $130 billion. If completed, it would be marked as "the largest technology acquisition ever."

Through the deal, Broadcom would become the third-largest chipmaker in the world, behind Intel and Samsung Electronics, and the combined Broadcom-Qualcomm business would "instantly become" the default provider of certain components required to build more than one billion smartphones sold every year. The acquisition would eclipse Dell's $67 billion purchase of EMC in 2015, considered at the time the biggest in the technology industry.

“This complementary transaction will position the combined company as a global communications leader with an impressive portfolio of technologies and products," Hock Tan, resident and chief executive officer of Broadcom, said in a statement Monday. “We would not make this offer if we were not confident that our common global customers would embrace the proposed combination.’’
In the midst of the acquisition news, Qualcomm and Apple have been embroiled in a legal battle since January after Apple sued Qualcomm for $1 billion. Apple accused Qualcomm of charging unfair royalties for "technologies they have nothing to do with" and failing to pay for quarterly rebates. As the disagreement escalated throughout 2017, with a new lawsuit emerging just last week, Apple is said to be considering eliminating Qualcomm chips from its devices completely moving forward.

However, through a newly combined Broadcom-Qualcomm company, which could bring about new management, analyst Stacy Rasgon pointed out that the acquisition could finally "smooth things over" between Apple and Qualcomm.
If Broadcom can pull off a deal, it could help smooth things over with Qualcomm’s biggest adversary. A change of management at Qualcomm might help resolve the dispute with Apple more quickly, according to Sanford C. Bernstein & Co. analyst Stacy Rasgon.
Broadcom also said that its offer stands whether or not Qualcomm completes its pending acquisition of NXP Semiconductor, which is currently facing regulatory scrutiny in Europe and resistance from NXP shareholders. Following the signing of a definitive agreement, Broadcom said it expects the proposed deal to be completed "within approximately 12 months."


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