Qualcomm will hold 2018 Annual General Meeting on March 6 at the Jacob Hall in San Diego, USA, where it will vote on whether to accept Broadcom's proposed replacement of existing Qualcomm board members and a $ 130-billion takeover bid. Want to lose, and Qualcomm can not afford the loss of independence.Without doubt, the vote will not only determine the fate of Qualcomm, but also more about the two for the 'interest' and 'honor' of the business how to affect the future of the mobile communications industry.
觊 觎 Qualcomm
The largest takeover bid in the history of the global semiconductor industry began in November 2017 when Broadcom proposed the acquisition of Qualcomm at a cash and stock price of $ 70 per share for a total transaction value of $ 130bn.The Qualcomm Board of Directors followed "significantly underperforming the company Stock value 'rejected Broadcom.
At that time, the semiconductor industry is experiencing an unprecedented integration of the industry giants continue to initiate mergers and acquisitions, expanding their business boundaries - Intel continued to spend 16.7 billion US dollars and 15.3 billion US dollars, the acquisition of programmable chip company Altera and Autonomous Driving Solutions Mobileye. Qualcomm is also announcing the acquisition of NXP, a car chip giant, for $ 38 billion, and NXP just completed a deal to acquire Freescale Semiconductor for $ 11.8 billion.
But unlike the style of these chip makers, Broadcom is known for its 'larger acquisition of debt over its competitors, immediate restructure upon completion of the transaction, the decisive sale of non-core businesses and layoffs to enhance the company's profitability.'
Broadcom, led by Malaysian Chen Fuyang, completed a series of capital operations, under which Broadcom's predecessor, Avago Technologies Ltd, spent $ 6.6 billion in 2013 to acquire Silicon Valley's storage chip company LSI, In 2015, it also spent 37 billion US dollars acquisition of veteran chip company Broadcom 2017, the acquisition is completed, Chen Fuyang then Broadcom's IOT business unit for a sale of 550 million US dollars to Cypress.
Broadcom's 'Capital Council' also explains the nature of capital in a sense that can not be satisfied with slow growth, is uncomfortable with long-term goals, and focuses only on immediate profit.
Anwarco and Broadcom employees comment on Glassdoor, a U.S. employee evaluation website, saying Chen Fuyang, "Adventures in debt acquisitions that focus too much on sales and profits, neglect R & D investment." Seems to validate such an assessment, just 10 months after acquiring Broadcom, Again announced a $ 5.9 billion acquisition of Brocade Communications Systems Inc., a network equipment company.
The deal has not yet been completed, the media revealed that M & A Madman plans to sell the latter's network business and data center Netcom business, distributed to Arris and EXtreme.
According to media reports, he once commented himself at the annual dinner of the Chinese American Semiconductor Professional Association: "I'm not a semiconductor person, but I know how to make money and run businesses." But Qualcomm's board of directors was significantly undervalued because of Broadcom's proposal The company's stock value 'rejected Chen Fuyang help themselves' make money and business.' Thus, Broadcom also nominated 11 directors to replace Qualcomm board members.
This completely angered Qualcomm's board of directors .. January 16 QUALCOMM board of directors sent an e-mail to shareholders that 'by petitioning Broadcom, Silver Lake, the relevant lack of experience in the board of directors, it is trying to take a opportunistic approach to low-cost acquisition Qualcomm. "Qualcomm urged shareholders to vote against Broadcom's board nomination in support of the current management continues to lead Qualcomm.
The letter said, "Broadcom asked Qualcomm shareholders to short-term value creation activities in the hands of a hostile takeover, but in fact Qualcomm has been leading Qualcomm board strongly oppose Broadcom aggressive strategy and urge you to reject its request, Vote on QUALCOMM's high-quality board members to vote again on white proxy cards, discard the blue proxy cards you have received from Broadcom. '
Qualcomm expects its revenue to reach between $ 35 and $ 370bn in 2019 and its adjusted earnings per share range from $ 6.75 to $ 7.5, much higher than the market's original estimate of $ 23.59bn and $ 3.79. After announcing the plan to remain independent Qualcomm won at least four times the price target increases and a stock rating increase.
Nomura Instinet analyst Romit Shah raised Qualcomm's stock rating from Neutral to Buy and raised its price target to $ 75 a share from $ 58 a share, he said: 'Qualcomm's leadership is very smart, but in the past few years, San Diego's management team is too humble now that Broadcom's hostile takeover attempt is "gunned to the head" and we expect Qualcomm to be more actively focused on raising shareholder value in order to keep the company independent. '
Rescue Qualcomm
Not only ratings agencies believe Qualcomm is still able to create significant value.China's mobile communications industry 'half of the country' - executives of SMIC, Lenovo, OPPO, vivo, Xiaomi, ZTE, Wentech and other enterprises on January 25 Have attended 2018 Qualcomm China Technology and Cooperation Summit, Qualcomm platform.
Lenovo Group chairman and CEO Yang Yuanqing said: 'Lenovo and Qualcomm more than 20 years of association, Lenovo overall product layout and Qualcomm highly fit, from smartphones to personal computers, tablet PCs, to AR / VR, IoT, and even the back-end server base "The CES 2018 CES won 80 awards, of which two-thirds are from a new type of smart phones in addition to mobile phones, of which more than 50 awards are the result of cooperation with Qualcomm.
Nine years ago, only 20 startup Millet got the full support of Qualcomm and became the "new leader" in China's smart phone manufacturers. "Lin Bin, co-founder and president of Xiaomi Co., Ltd., said: 'Every piece of millet Qualcomm chips are used in the flagship handsets and we fully support Qualcomm in maintaining innovation and long-term commitment. '
Outspoken OPPO CEO Chen Mingyong said, 'Qualcomm's team is impressed, that is driven by the greatest technology-driven innovation, not just interest-oriented, from this perspective, I do not quite understand Broadcom this However, it is not necessarily a blessing for the industry and consumers to hear the rumors that Broadcom is more capable of capital operation and Broadcom may acquire a Qualcomm monopoly.
Xiaomi, OPPO, vivo, etc. are all typical enterprises that have grown up under the "Qualcomm model." They not only occupy half of the domestic market, but also actively explore the overseas market and achieved remarkable results. , Millet ranked first in the Indian market OPPO also officially landed in Japan on January 31.
Data show that in 2015 and 2017, Qualcomm chip business revenue from Chinese manufacturers were 40, 60 billion US dollars, is expected to reach 8 billion US dollars in 2019, a CAGR of 17% .China 5G market broad prospects for development , Making Qualcomm the Chinese partners as "the most dynamic partners, but also the most stable partner." As Qualcomm president Christiano Amon said: "9 years ago, Qualcomm began to support the start-up millet and OPPO, vivo and other Chinese mobile phone companies now feng shui rotation, these companies began to support us.
Ecosystem power is like a closely-knit gear - For Qualcomm's Chinese partner, who is on the verge of fighting a 5G, Qualcomm is supported not only because of the upcoming 5G era, with smart cars, car networking, the Internet of Things, artificial intelligence as A series of technologies represented by it have been recognized as the new engines of the current world economic development and Qualcomm is at a technological frontier.Moreover, Chinese mobile terminal manufacturers need continuous innovation to continue their hard-won leading position.For example, Vivo CEO Shen Wei said, 'The entire mobile industry can not be separated from years of high-pass focus, Qualcomm is not short-sighted, do not care about the immediate interests, we need them, otherwise our 6G, 7G where?' He said.
According to Counterpoint Research, seven of the world's top 10 3G / 4G smartphone makers are Chinese manufacturers in 2017. Compared with their comments, these handset-based handset manufacturers in China are more concerned about the future. , OPPO, Lenovo and other four handset manufacturers and Qualcomm signed a RF front-end solutions across the year purchase orders.In the next three years (2019 -2021 years), four handset manufacturers will purchase a total value of not less than 2 billion US dollars RF front-end components Prior to November last year, millet, vivo, OPPO and Qualcomm signed an agreement in the next few years will purchase from Qualcomm worth 12 billion US dollars of components.
Currently, QUALCOMM is working hard with many Chinese operators, infrastructure equipment manufacturers, OEMs and other partners to accelerate the 5G to become a reality in 2019. Previously, November 17, 2017, Qualcomm has been with ZTE and China Mobile to achieve global success The first 5G new air interface system interoperability 5G new air interface system interoperability demonstration at China Mobile 5G Joint Innovation Center Laboratory, provided by Qualcomm 5G new air terminal prototype, ZTE 5G new air interface pre-commercial base station support. Success is seen as an important milestone in the evolution of the global 5G industry.
Li Zhengmao, vice president of China Mobile Communications Corporation, hopes that the cooperation between Qualcomm and our Chinese industry will continue to be successful in the 5G era. "He disclosed that China Mobile will carry out 5G demonstration projects in 12 cities nationwide starting from the second half of 2018, 5G business forward.
Li Zhengmao had led and negotiated the introduction of Qualcomm CDMA into the Chinese market that year, and the CDMA negotiations have also played a key role in promoting China's accession to the WTO. "The cooperation with Qualcomm in that year now shows that the result is good." He said.
NXP significance
The mobile communications industry in China already has a more objective and fair view of the world, but for the moment it is the 30-year high-tech mission to develop the most difficult time in history.
On January 29, Qualcomm CEO Steve Mollenkopf led a top management team to vocally vociferously oppose Broadcom's tender offer, claiming that its' low-value, risky, malicious offer to shareholders Meaningless' is' an unrealistically high profile. '"Steve Morrenkov proposed that shareholders not support Broadcom's voting plan and put forward specific strategies for raising shareholders' value, including' further Cut $ 1 billion in costs, gains from NXP transactions, and settlement of patent litigation with Apple.
Excluding Apple's royalties, Qualcomm expects earnings per share to be $ 5.25 in 2019. While 5G, which drives the next technology revolution, will use Qualcomm's technology to create a truly interconnected world, Qualcomm, The dollar's acquisition of NXP Semiconductors will push the process forward.
Xiang Ligang, a well-known observer in China's telecommunications industry, said that for the 5G and the smart Internet, the chip industry will never stay on the handset chip.
In a sense, Qualcomm's acquisition of NXP will further deepen and strengthen its cooperation with Chinese industries in the Internet of Things, automotive electronics and other fields, and further expand the successful mode of cooperation between Qualcomm and China's smart phone industry to China Automotive electronics, car networking, networking industry, catch up and lead.In 2017 October, Qualcomm has established with the Chongqing municipal government intelligent network car collaborative innovation center, in the automotive electronics and car networking depth with the Chinese industry In 2017, Qualcomm has set up a joint IoT innovation center in Nanjing, Chongqing and Qingdao to carry out technology and innovation cooperation with China in the field of IoT .. In January 2018, BYD announced at the Consumer Electronics Show Qualcomm Snapdragon car platform for its electric vehicles for infotainment and instrumentation systems.
Qualcomm's acquisition of NXP will allow Qualcomm's chip products to become richer and more competitive, as Qualcomm is the most powerful support for the Android camp, but Broadcom's acquisition of Qualcomm capabilities to enhance, there is no real help. More importantly, Qualcomm acquired NXP, the independent development of Qualcomm in China is transparent and predictable.Once Qualcomm failed to lead NXP acquisition of Qualcomm Qualcomm will cooperate with the existing Qualcomm in China Stable cooperation of partners brings about major uncertainties and even negative effects.
Quantitative point of view from the transaction, Qualcomm acquired NXP volume is 38 billion US dollars, the two companies combined market value will exceed 100 billion US dollars.Buton's bid for Qualcomm is 130 billion US dollars, so far the history of science and technology The largest mergers and acquisitions, the combined market capitalization of the two will be more than 200 billion US dollars.Two mergers and acquisitions, apparently Qualcomm NXP M & A impact on the industry is much smaller than Broadcom M & A caused by the chain reaction, The same is true of the domestic related industries.
'In the event of mergers and acquisitions and turmoil, a large number of business disruptions and costs in the acquisition process will certainly affect the development of new products, not only for the development of Qualcomm, but also for the development of the entire Android camp is very unfavorable. NXP is not only the world's largest automotive chip maker, but also in Europe's leading chip business and technology vendors.According to foreign media reports, before Qualcomm has made a series of commitments to the European Commission, including NXP within the next 8 years to maintain the original business The same model continue to be externally licensed NXP Mifare technology and trademarks.Meanwhile, Qualcomm also promised not to buy NXP's standard NFC patents and some non-standard NFC communications patents.These patents will be handed over to a third party, the third party will be at Free worldwide authorization within 3 years. As for the other NFC patents acquired by Qualcomm, Qualcomm promises to be used only for defensive purposes.
A series of facts show that Qualcomm believes we can still create significant value.Up to now, Qualcomm is still waiting for Chinese authorities to approve the acquisition of NXP transactions and plans to complete the transaction by 2018. Most industry professionals believe that, Qualcomm and the fate of China's mobile communications industry are deeply bundled together, described as a prosperous, a loss of all losses.Golton also approved of the acquisition of China optimistic.
In addition, Qualcomm is planning a major stock repurchase as an alternative to strengthen its market value, prevent Broadcom hostile takeover.BoomcomcompleteCommunicatecommunicatecommunicatecommunicatecommunicatecommunicatecommunicatecommunicatecommunicatecommunicatecommunicatecontent Chinese smartphone makers tied together are worried.
Sun Yan Biao, president of the first mobile phone industry research institute, pointed out that the reason why the first-tier mobile phone manufacturers in China, represented by OPPO, vivo and Xiaomi, oppose Broadcom's acquisition of Qualcomm in a fundamental way is that the rise of China's smart phone makers has in fact moved Apple and Samsung and other mobile phone giant 'cheese'.
'Today, the main competitors of China's mobile phone front-line manufacturers represented by OPPO, vivo and Xiaomi have become Apple, especially the 5G, which has become the best market opportunity for Chinese handset manufacturers to catch up with and surpass Apple.' Sun Yan Biao said: If Broadcom only value profits, and as the industry analysis, just short-term arbitrage, or even the sale of Qualcomm's baseband business sold to Apple, then the Android camp in the era of 5G will become backward from the lead, or even face a disaster. 'Independence
Qualcomm recently passed an employee termination compensation plan: once Qualcomm's control changes, if Qualcomm employees are fired, Qualcomm's acquirer will have to pay more resignation compensation to boost Broadcom's difficulty in acquiring Qualcomm. Through a series of capital operations, Broadcom to become the world's fifth largest semiconductor companies Chen Fuyang different Qualcomm's founders team is head over the 'Father of CDMA' name all the way through the high-pass business model in the past three decades Laid the foundation for the development of the mobile communications industry.And in a mobile communications industry to create a living, many businesses are created by the times, but more because of the 'people'.
As Zhou Zixue, chairman of Semiconductor Manufacturing International Corporation, said: "The success of the integrated chip industry, 10% of the weight comes from capital investment. The rest are long-term adherence and accumulation of this industry, especially long-term Adhere to and focus on this industry people. 'He said,' These people are actually the most valuable.Not aware of the fact that why you put money in this place? The entire electronic information industry, talent one. '
This is why Qualcomm's value can not simply be viewed in the balance sheet and as a more commercial point of view. Like many businesses that require long-term investment, silicon and underlying foundries have long and loneliness to develop because users want more experience Easy, it is not easy to pay several times it, because in many cases innovation can not be repeated.
Many people think that the so-called innovative spirit is the business card to brainwash the user card, but if you are really close to those Chinese New Year holiday manufacturers do not leave the smart phone manufacturers, or in the face of those who worked for Qualcomm more than a decade of 'inventors' , You will find that their relationship with the work is not just a matter of love, love and theirs.
When you hear a partner say, 'We need a Qualcomm, or where are the 6G and 7G?', Qualcomm employees clutched each other and smiled, raising their faces to keep their eyes from falling.
When you see this moment, you may have a different kind of feeling about what they believe in. If you do not understand this, ignore the impact of this culture on innovation, simply use the post-acquisition profit target as the starting point, then Even if the acquisition, buy may be a profit, but not a dime with innovation.