Broadcom takeover makes little sense after aggressive Qualcomm announcements

Qualcomm has found itself in another important battle over the last few weeks. Rather than a legal dispute with Apple, this fight comes from a potential takeover and buyout by tech-giant Broadcom. Broadcom already made one official offer to shareholders for the company, totaling around $103B, but it was unanimously rejected by Qualcomm’s board.

As Qualcomm fights for its life, it held its second annual Tech Summit on the shores of Maui to demonstrate to over 300 media and analysts the value and innovation that it provides the market. Even if it cannot shed the takeover from Broadcom completely, Qualcomm needs to prove to shareholders and the industry at large that its worth is much higher than was initially on the table.

Broadcom is a company that focuses strictly on profit and loss, well known in the tech fields for minimal investment in R&D or pushing technology forward. It has a portfolio of established, and well entrenched, tech that it sells to a huge number of partners. But innovations like 5G, a new processor for Windows, and advancing the state of mobile technology with Snapdragon require a different mindset. And it’s one that many analysts in the field agree Broadcom does not possess.

In the mobile space, Qualcomm is the only company that has the technical aptitude to keep up with Apple when it comes to silicon and processor design. The entire Android smartphone ecosystem, which is multiple times larger than the iPhone market, depends on Qualcomm and Snapdragon to move performance, efficiency, and features forward. Apple has become a leader in silicon design, and it would likely run away with that advantage if Qualcomm’s aggressive mentality does not persist.

Qualcomm’s latest high performance mobile processor, the Snapdragon 845, was officially unveiled this week and the assumption is that it will power the biggest flagship smartphones of 2018. That will include the Samsung Galaxy S9, as well as hardware from Sony, LG, HTC, and others. This updated platform offers improved processor performance, faster graphics for gaming and VR, and better co-processing for artificial intelligence tasks. It offers those improvements while also being more power efficient, offering better battery life for mobile devices starting next year.

Qualcomm is entering a new market this winter with new Windows 10-based PCs that will be powered by Snapdragon processors, rather than Intel or AMD options that we have been limited to previously. Using the same mobile platform that it built for smartphones, but tweaked for higher performance, Qualcomm can address a large and growing market of thin-and-light notebooks.

It also brings about change to a space that has been stagnant with cellular connectivity, truly all-day battery life, and new form factors. Cellular connectivity means your notebook powered by Qualcomm Snapdragon will uses the same wireless networks as your phone and will remain “always connected” in the same fashion, meaning your data and apps will be up-to-date when you open it. Qualcomm partners like HP and ASUS, both of which showed machines on stage, are quoting 20+ hours of true-use, a substantial jump over the current Intel platforms.

AMD is also partnering with Qualcomm and announced integration of the same Snapdragon X16 LTE modem on its upcoming notebook processor platforms. This will give higher-end AMD-based notebooks, that offer a very different balance of battery life and graphics performance, the same benefit of always-connected cellular LTE, and open another revenue stream for Qualcomm. Microsoft recently announced the adoption of Qualcomm modems for its Surface family of notebooks.

Qualcomm remains one of the primary developers of next-generation 5G cellular technology. 5G will bring faster speeds, broader connectivity, and support for the billions of devices coming with the IoT revolution. But it requires years of engineering and 10s of millions of dollars in investment to build, and without a driver like Qualcomm, advancements in the mobile connectivity space would be slower. Intel is the other major player in this field, but it has little experience with the testing, tuning, and infrastructure required for a new technological rollout.

Qualcomm has plenty of challenges ahead of it, both on the technical and legal fronts, but it continues to make the case that its own portfolio of products and patents, as well as the aggressive mobile development mindset it maintains, will add value as we move forward.