In November last year, Chief Executive Officer of Broadcom Chen Fuying announced the acquisition of Qualcomm, which aroused great shock in the global capital market and industrial sector. Not only was the amount of acquisitions high, but also because of Broadcom and Qualcomm's consumption in China Netcom's enterprise and mobile phones respectively. End-of-the-box chip industry players will form a giant company after the merger, second only to Intel and Samsung.
Put on Guoan Big Hat Broadcom by 3 Zhen
In order to demonstrate the determination of acquisition, Chen Fuying went to the White House to meet with US President Trump and published in May 2018, moving the headquarters of Broadcom from Singapore to the United States. This not only meets Trump’s policy of “manufacturing back to the United States”. Also for the merger of Qualcomm to exclude foreign mergers and acquisitions may endanger the United States national security concerns and obstacles.
In addition, Broadcom has also taken actions to increase the purchase price, released 2 companies from the anti-monopoly investigation and other information, and has nominated the list of 6 Qualcomm directors to prepare for more than half of the board seats in the Qualcomm shareholders meeting on March 6. Forcibly passed the acquisition of Qualcomm. It is understood that Broadcom had a good chance of winning before the shareholders meeting. The list of top 25 largest shareholders of Broadcom and Qualcomm was shared, 17 of which overlapped; Broadcom’s share price has risen 1 times in the past three years, but Qualcomm’s stock price It did not move at all and let shareholders believe that Broadcom merged Qualcomm to make Qualcomm’s stocks in their hands to make big profits. Of course, it fully supported Broadcom’s nomination of directors.
Therefore, on the eve of Qualcomm's holding of the shareholders’ meeting, Qualcomm chairman Paul Jacobs knew that the general trend was gone, so he planned to respond to the script and requested Broadcom to increase the purchase price to US$106 billion. On the other hand, he asked the US Foreign Investment Commission. (CFIUS) Intervention investigation; the former is to make Broadcom unable to swallow the price, while the latter is to advocate mergers and acquisitions will endanger the national security, because Qualcomm has 4G, 5G and other key communication technologies, also contracting the US military a lot of projects, hope With the national security hat forced back Broadcom.
After the introduction of CFIUS by Qualcomm, the offensive and defensive postures of the two sides immediately reversed. Over the past few years, CFIUS has repeatedly blocked Chinese companies from acquiring US-based companies. Although Broadcom is a Singaporean company rather than a Chinese-funded company, Qualcomm’s constant release of Broadcom’s major customers is all Huawei. Other Chinese-funded enterprises finally let Trump reject the case. In the course of the dual-led battle, Intel also announced that it intended to acquire Broadcom's episode, but it has not been confirmed by Intel. In the past 3 years, Intel has acquired a number of companies, including 16.7 billion. US dollar acquires Altera, a provider of programmable logic, US$15.3 billion for Mobileye, an Israeli computer vision technology company, and US$1.5 billion for shares in Ziguang’s Spreadtrum and RDA. The success of these investment projects has not yet been realized. Broadcom, with a market value of more than 100 billion U.S. dollars, is clearly not a clever decision.
In the past 10 years, the global semiconductor industry has initiated a consolidation trend, and the amount of M&A has been continuously innovating. The key is the capital market's fueling. As the stock market has taken over 10 years, the Dow Jones and Nasdaq indexes continue to rise, regardless of the buyer or seller. Mergers and acquisitions are all fuzes in which share prices have soared; mergers often sell at high premiums, ranging from 3 to 50%. As for acquisitions, customers and assets are also a guarantee for pushing up share prices.
The wave of semiconductor mergers and acquisitions is booming
This time, Broadcom is a concrete case. In 2006, Chen Fuying took the post of CEO of Avago. He was listed in the United States in 2009. He continued to acquire companies such as LSI, PLX and Emulex from 2013 to 2015, which increased Avago's market capitalization by a factor of 4. In the above, three years ago, Xiao Tong Da bought Broadcom again. After the acquisition, Anwara Gold was renamed Broadcom, and the stock price rose nearly one time.
Observe the trend of international industry development and discover that M&A is a successful formula for semiconductor manufacturers. Whether it is to incorporate the latest technology or obtain a product line that is not yet laid out in order to expand the economic scale, increase the level of competition, and create barriers that others cannot overcome. .
In the case of Broadcom, which uses the most sophisticated mergers and acquisitions as an example, after a series of acquisitions, Broadcom is already the dominant player in the use of Netcom's semiconductor components. The market share of Ethernet switch chips used in servers is 61%. Position. Broadcom is based on a high market share, which increases the unit price of products, creates a highly profitable three-high strategy, and becomes a major competitive strategy.
However, Broadcom's product pricing strategy has become one of the reasons why CFIUS rejected Broadcom's acquisition of the Gaotong case. CFIUS believes that Broadcom has abused market position and raised prices unfairly for customers, such as Amazon purchasing most of the exchanges from Broadcom. The chip, if Amazon buys chips from rival Broadcom again, Broadcom will increase product prices, forcing Amazon to sign longer contracts, which will reduce prices.
As for the high pass, there was no active acquisition for several years, but two years ago when it decided to buy NXP Semiconductors (NXP), and when Broadcom’s acquisition of Qualcomm was inextricably linked, it announced that it would increase the purchase amount of NXP to US$44 billion. The merger and acquisition case may affect the progress of the double-pass mergers and acquisitions. The two camps are a series of exchanges.
NXP is the world leader in automotive semiconductors. Qualcomm's acquisition of NXP is intended to gain a place in the electric vehicle and self-drive markets. Vehicle electronics is the largest application market for semiconductor components in the future, and NXP holds near-field wireless communications (NFC), etc. The key technologies, if they can integrate Qualcomm's 4G and 5G technologies, will make Qualcomm's monopolistic advantages more established.
US-China Competitor Station Ground Breakout
However, Qualcomm’s product pricing strategy is different from Broadcom. Qualcomm owns key technologies and patents for communications. Therefore, it does not require chips to be sold at a high price. Instead, it directly seeks royalties from mobile phone companies. More than 7 billion US dollars, profits far better than the chip, so the chip mining low-cost strategy, which is also the main reason for the drop in the gross profit margin of MediaTek, Spreadtrum in recent years.
M & A has caused the competition among international giants to continue to increase, which is already the norm in the semiconductor industry. However, for Taiwan, although it is claimed that the world's second-largest IC design country is second only to the United States, it is in fact quite different. The key to the mainland's aggressiveness is the fact that Taiwan's mergers and acquisitions are not very popular.
Taiwanese business owners always have the mentality of “rather than a chicken head, not a cow.” Taiwan’s semiconductor industry used to have strong advantages, but it did not seize the opportunity to reorganize and reorganize it. Many companies today are small in scale and lack international distribution. Niche products can compete in small markets.
In addition, another focus of the follow-up observation of the double-pass merger is that the protectionism provoked by Trump has been on the rise. Trump’s high tariff policy for China’s more than 100 products, totaling US$60 billion in heavy taxes , This stormy beauty, Sino-Japanese trade friction, Trump rejects Broadcom and Qualcomm after Trump highlights the beauty, the fight between you and me on various topics.
In fact, China has long been the largest market for many American business enterprises. Both Qualcomm, Broadcom, and even Apple, the amount and proportion of sales in China have increased significantly. For example, Qualcomm’s revenue from China in 2016 was US$13.5 billion. Revenue reached 57%; As for 2017 revenue of 22.3 billion US dollars, from China's performance of 14.58 billion US dollars, accounting for 65% of overall revenue.
Trump’s executive orders have caused a dilemma for Qualcomm, which has a growing proportion of its business in China. Under the recent expansion of the investment semiconductor industry by the Chinese government, the main axis of the policy is to replace foreign products with local chips, and Qualcomm wants to increase market share. Lesser. In the United States and China, the Taiwanese businessmen may also be affected, because Taiwanese businessmen are also foreign businessmen. Compared with American businessmen, Taiwanese businessmen do not have the burden of the two major powers. Strategic location.