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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KGI Expects Intel to Be Exclusive Supplier of Modems in 2018 iPhones

Intel could be the exclusive supplier of LTE modems for all new iPhones launched in 2018, according to KGI Securities analyst Ming-Chi Kuo.

The key takeaway of the research note, obtained by MacRumors:
We expect Intel to be the exclusive supplier of baseband chip for 2H18 new iPhone models, while Qualcomm may not have a share of the orders at all.
Kuo previously expected Intel to supply 70 percent of the modems, with Qualcomm providing the remaining 30 percent of orders, but he now believes Intel will be the sole supplier given several competitive advantages.

First and foremost, Intel's latest XMM 7560 modem [PDF] supports both GSM and CDMA, meaning that Apple could release a single iPhone model that works across AT&T, Verizon, T-Mobile, and Sprint. Intel modems previously lacked CDMA, meaning Apple could never fully ditch Qualcomm for all iPhone models.

Apple is also embroiled in a major lawsuit with Qualcomm over anticompetitive licensing practices, and Kuo believes the iPhone maker switching to Intel as its exclusive modem supplier will place added pressure on Qualcomm.

Kuo added that it's too early to tell if Intel will be able to maintain its position of exclusivity in the future, as Apple typically prefers to diversify its supply chain. He adds that Apple may give orders to Qualcomm again in exchange for concessions in the ongoing lawsuit between the two companies.

In order to make up for the lost iPhone business, Kuo expects Qualcomm will be more aggressive in securing orders from Chinese smartphone makers. However, he believes these Chinese companies don't want a monopolized market, so Qualcomm's ability to gain market share in the country may be limited.

Kuo also reiterated that LTE transmission speeds will increase significantly in new iPhone models released in the second half of 2018.

In a previous research note from November, Kuo highlighted that Intel's XMM 7560 modem supports 4x4 MIMO technology, compared to only 2x2 MIMO in the iPhone 8, iPhone 8 Plus, and iPhone X. The faster LTE speeds will also be made possible by an upgraded antenna design in the next iPhones.

Related Roundup: 2018 iPhones

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EU Regulator Fines Qualcomm $1.2 Billion for Paying Apple to Use Its Mobile Chips

Qualcomm has been hit with a 997 million euro ($1.2 billion) fine by EU antitrust regulators for paying Apple to use its LTE chips in iOS devices, Reuters reported on Wednesday. According to the European Commission's investigation, the payments to Apple occurred from 2011 to 2016, and were made with the sole aim of blocking Qualcomm's LTE chipset market rivals, such as Intel.

"Qualcomm paid billions of U.S. dollars to a key customer, Apple, so that it would not buy from rivals. These payments were not just reductions in price – they were made on the condition that Apple would exclusively use Qualcomm's baseband chipsets in all its iPhones and iPads," European Competition Commissioner Margrethe Vestager said in a statement.

"This meant that no rival could effectively challenge Qualcomm in this market, no matter how good their products were," she said.
The EU fine – said to represent 4.9 percent of Qualcomm's 2017 turnover – is particularly bad news for the company, as it could put it at increased risk of a $103 billion hostile takeover bid by rival U.S. chipmaker Broadcom. Separately, Qualcomm is also in an ongoing legal battle with Apple over smartphone chips.

The troubles began for Qualcomm in January 2017 when the Federal Trade Commission complained that it had engaged in anticompetitive patent licensing practices. Soon after, Apple sued the chipmaker for $1 billion, accusing it of charging unfair royalties for "technologies they have nothing to do with" and refusing to pay quarterly rebates. A Qualcomm countersuit followed in April, and the dispute escalated throughout the year with expanded lawsuits and claims lodged by both sides.

The last legal volley between the two came in November, when Apple countersued Qualcomm with a patent infringement claim, after the latter company sought iPhone and iPad import bans in the United States last summer.

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iPhone X Models With Qualcomm Modem Still Have Faster LTE Speeds Than Those With Intel Modems

iPhone X models equipped with Qualcomm's Snapdragon X16 modem get consistently better LTE speeds than versions with Intel's XMM7480 modem, according to wireless signal testing firm Cellular Insights.

For context, Cellular Insights used professional measurement equipment equipped with four Vivaldi antennas to simulate LTE performance at different distances from a cellular tower with the Qualcomm and Intel models.

Cellular Insights started with a LTE signal from a strong -85dBm, and gradually reduced the power level to simulate moving away from a cellular tower where signal is weaker, until the modems lost their cellular connectivity.

The testing, shared with PC Magazine, was based on performance on LTE Band 4, which is used by every major carrier in the United States except Sprint, as well as in Canada and parts of Latin America.

The results reveal that with only limited attenuation, or signal reduction in simple terms, the iPhone X with an Intel modem started to experience lower LTE download speeds than the iPhone X with a Qualcomm modem.
While both modems started out with 195Mbps of download throughput on a 20MHz carrier, the Qualcomm difference appeared quickly, as the Intel modem dropped to 169Mbps at -87dBm. The Qualcomm modem took an additional -6dBm of attenuation to get to that speed.
Cellular Insights said the difference is most noticeable in very weak signal conditions, in which the iPhone X with a Qualcomm modem experienced 67 percent faster LTE download speeds on average compared to the Intel model.
At very weak signal strength, below -120dBm, the Qualcomm modem got speeds on average 67 percent faster than the Intel modem. The Intel modem finally died at -129dBm and the Qualcomm modem died at -130dBm, so we didn't find a lot of difference in when the modems finally gave out.
iPhone 7 and iPhone 7 Plus models with Qualcomm modems also had faster LTE download speeds than their Intel counterparts last year, but Cellular Insights said the gap was narrower between iPhone X models.

PC Magazine speculated that Apple could be artificially crippling the Qualcomm modem to have similar performance as the Intel modem, given the controversy that arose with the iPhone 7 and iPhone 7 Plus last year.

Qualcomm's Snapdragon X16 is a gigabit-class modem that supports 4x4 MIMO, for example, but the functionality is disabled in the iPhone X. The result is that both the Qualcomm and Intel versions of the iPhone X have a peak theoretical download speed of 600 Mbps in most countries.

All in all, what this all means is that customers who want to ensure they receive the absolute highest LTE speeds in areas with weaker signal reception should put some thought into which iPhone model they purchase.

Apple offers the iPhone X, iPhone 8, and iPhone 8 Plus in two models everywhere but Japan. The first is the Qualcomm-based model A1865, which works with CDMA networks like Verizon and Sprint in the United States. The second is the Intel-based A1901, which works with GSM networks like AT&T and T-Mobile.

If you want the best possible LTE performance, purchasing the A1865 model is the best option. For now, this requires ordering the Verizon model if you want an unlocked device in the United States. In many other countries, and in the U.S. soon enough, Apple sells an unlocked SIM-free A1865 model.

Related Roundup: iPhone X
Buyer's Guide: iPhone X (Buy Now)

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Qualcomm Seeks Import Ban on AT&T and T-Mobile iPhone 8 and iPhone X Models

Qualcomm today announced that it has filed three new patent infringement claims against Apple, accusing the Cupertino company of violating a total of 16 Qualcomm patents with its most recent iPhones, including the iPhone X.

Most of the patents in question cover technologies like carrier aggregation, memory designs, and power management features that are designed help to reduce battery usage, but in one claim, Qualcomm says Apple is using a depth-based image enhancement technique for Portrait mode that violates a Qualcomm patent.

Qualcomm is also filing a new complaint with the United States International Trade Commission (ITC) concerning five of the patents, and it is asking the ITC to ban imports of iPhone 8, iPhone 8 Plus, and iPhone X models that use chips from Intel, aka AT&T and T-Mobile devices in the United States.

The complaint with the ITC follows a previous filing in July that saw Qualcomm ask for an import ban on iPhone 7 and iPhone 7 Plus models equipped with Intel modem chips, along with some iPad models. Qualcomm has not asked for a ban on iPhones that use Qualcomm LTE chips, with the reasoning that a more limited exclusion order is more likely to be granted.

In the lawsuit, Qualcomm once again says its inventions form the "very core" of "modern mobile communication," and that without Qualcomm technology, Apple products "would lose much of their consumer appeal."

Qualcomm is seeking damages in an amount to be proven at trial, a permanent injunction against Apple, and attorneys fees.

Qualcomm's latest filing follows a countersuit from Apple that was filed earlier this week. Apple claims that Qualcomm's Snapdragon chips infringe on "at least" eight battery life patents owned by Apple.

The legal battle between Apple and Qualcomm kicked off in January of this year, and it has escalated rapidly over the course of the last several months. It is not clear if the ITC will agree to investigate the claims Qualcomm has made against Apple, but this will be a legal battle that spans several years, so Apple devices are in no danger of being banned anytime soon.

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Apple Countersues Qualcomm for Patent Infringement Related to Snapdragon Chips

In the ongoing legal feud between Apple and LTE chipmaker Qualcomm, Reuters reports today that Apple has made the latest move by filing a countersuit against Qualcomm and claiming that the supplier's Snapdragon chips -- used in many Android devices -- infringe on the Cupertino company's patents.

The countersuit is Apple's retaliation against Qualcomm after the latter company sought iPhone and iPad import bans in the United States over the summer. At the time, Qualcomm alleged that Apple infringed on six Qualcomm patents related to carrier aggregation and technologies that were designed to allow iPhones to save battery life while communicating. Apple denied any of these claims and said that Qualcomm's patents were "invalid."

Apple's new countersuit further revises its answer to Qualcomm's complaint from July by adding on the accusation of patent infringement surrounding the Snapdragon chips. The filing alleges that Apple owns "at least" eight battery life patents Qualcomm has violated, related to making sure that each part of the phone's processor draws only minimum power needed to function, powering down parts of the processor when not needed, and ensuring that sleep and wake functions work better for the user.

Apple specifically says that Qualcomm's Snapdragon 800 and 820 processors -- included in Samsung and Google smartphones -- infringe on these patents, but Apple has only named Qualcomm in its counter lawsuit. The specific monetary damages Apple is looking for were not disclosed.
Apple Inc on Thursday filed a countersuit against Qualcomm Inc, alleging that Qualcomm’s Snapdragon mobile phone chips that power a wide variety of Android-based devices infringe on Apple’s patents, the latest development in a long-running dispute.

“Apple began seeking those patents years before Qualcomm began seeking the patents it asserts against Apple in this case,” the company wrote in its complaint.
2017 has seen rebuttal after rebuttal in the Apple versus Qualcomm legal battle, kicking off in January when the FTC complained that Qualcomm had engaged in anticompetitive patent licensing practices. Soon after, Apple sued Qualcomm for $1 billion, accusing the company of charging unfair royalties for "technologies they have nothing to do with" and refusing to pay quarterly rebates. A Qualcomm countersuit followed in April, and the dispute escalated throughout the year with expanded lawsuits and claims lodged by each side.

Over the summer, Qualcomm began facing an additional lawsuit from the United States Federal Trade Commission, happening separately from the dispute with Apple but covering many of the same anticompetitive tactics that Apple claims in its own lawsuit.

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Apple Working With Intel on 5G Hardware for Future iPhones

Apple is "leaning heavily" towards choosing Intel's 5G modems for its future iPhones, according to Fast Company. Apple engineers are said to be already working with Intel on upcoming 5G technology.

Apple's discussions with Qualcomm about 5G modems, meanwhile, have been described as "limited."

Citing a source with knowledge of Apple's plans, Fast Company says that while Qualcomm 5G modems will offer more specialized carrier features, many of those features will not be adopted by carriers, leading Apple to believe Intel's hardware will be sufficient for future devices.
The end game, multiple sources have said, is to build the Intel modem onto an integrated system-on-a-chip (SoC) that would also contain the CPU, GPU, and other iPhone components. The SoC would be co-designed by Intel and Apple and would be fabricated at an Intel facility.
Intel reportedly has "multiple thousands" of people working on 5G technology in an effort to catch up with Qualcomm and win the contract from Apple.

Intel this morning said that it had made "substantial advances" in its wireless product roadmap to accelerate the adoption of 5G. According to Intel, an end-to-end 5G call based on early 5G silicon has been completed successfully, which Intel says is a "key milestone in its development."

Intel expects its first 5G chips to roll out in 2019, ahead of the wide rollout of 5G networks. T-Mobile just today said that it is planning to roll out its fifth-generation network across the United States by 2020, and most of the carriers in the United States are already experimenting with limited trials.

5G is expected to deliver speeds that are 10 to 100 times faster than the average 4G connection, at a gigabit per second or higher, along with lower latency and other benefits.

Rumors that Apple is considering Intel's 5G technology are in line with previous reports that have suggested Apple is considering eliminating Qualcomm chips from its 2018 iPhones and iPads.

Apple and Qualcomm have been embroiled in a bitter legal battle since the beginning of the year, which has continued to escalate over the months. Apple believes Qualcomm charges unfair royalties for "technologies they have nothing to do with," while Qualcomm claims its technology is "at the heart of every iPhone."

Apple and Apple suppliers have ceased paying royalties to Qualcomm amid the dispute, while Qualcomm has filed several patent infringement lawsuits against Apple and has asked for import/export bans in the United States and China.

Related Roundup: iPhone X
Tags: Intel, Qualcomm, 5G
Buyer's Guide: iPhone X (Buy Now)

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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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Qualcomm Accuses Apple of Helping Intel Using Qualcomm Software

Qualcomm on Wednesday filed yet another lawsuit against Apple, this time accusing the company of breaching software licensing terms and using Qualcomm code to help Intel, reports Bloomberg.

According to Qualcomm, Apple breached a contract that dictates the use of software that's designed to make Qualcomm chips work with other iPhone components. Qualcomm also believes Apple may have used its access to that software to help Intel with its own modem chip development.

Since 2016, Apple has been using LTE chips from both Intel and Qualcomm in an effort to diversify its supply chain and move some production away from Qualcomm. The iPhone 7, 7 Plus, 8, and 8 Plus all use a mix of Qualcomm and Intel chips.

In light of the ongoing legal battle with Qualcomm, Apple is said to be considering eliminating Qualcomm chips from its devices all together, instead adopting chips from Intel and possibly MediaTek. Rumors suggest Qualcomm has been withholding software from Apple that Apple needs to test prototype devices for next year, forcing Apple's hand.

Qualcomm and Apple have been involved in an escalating legal fight since the beginning of the year after Apple sued Qualcomm for $1 billion. Apple has accused Qualcomm of charging unfair royalties for "technologies they have nothing to do with" and failing to pay for quarterly rebates.

Apple has since stopped paying royalties to Qualcomm until new licensing fees have been worked out, as have Apple suppliers, significantly impacting Qualcomm's profits.

Qualcomm has since levied several lawsuits against Apple, accusing the company of patent infringement and asking both the United States and China to block imports and exports of some iPhone models.

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