On Tuesday morning, QUALCOMM, Inc. (NASDAQ:QCOM) increased its offer for NXP Semiconductors NV (NASDAQ:NXPI) from $110 per share to $127.50. Subsequently, Broadcom Ltd (NASDAQ:AVGO) reaffirmed its commitment to acquiring Qualcomm but adjusted its offer from $82/share to $79/share if Qualcomm successfully closes the NXP transaction.
Canaccord’s top analyst Michael Walkley commented, “We believe Qualcomm and Broadcom are uniquely positioned for reaccelerating revenue and earnings growth as the market transitions to 5G. We believe Qualcomm is well ahead of its competitors in 5G investment and overall roadmap, and we also believe Broadcom’s FBAR filters will grow its strong content share in 5G devices versus 4G. Further, we believe Apple would likely need to work more closely with a combined Qualcomm and Broadcom, given the combined company would have unique technology solutions for the smartphone market.”
This potential combination could adversely impact Intel’s modem share in future iPhone models and Intel’s potential to work with Apple as a smartphone chipset foundry. The timing of Broadcom’s bid is potentially compelling, given Qualcomm’s market share losses at Apple are anticipated to continue with next-generation iPhones, and given the lost licensing revenue from Apple due to the ongoing disputes. Outside of the wireless market, we believe the very strong position held by Broadcom’s switching/routing chipset business with key vendors including Cisco could prove an important beachhead in the datacenter market for Qualcomm’s new ARM-based server offerings,” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Michael Walkley has a yearly average return of 18.5% and a 67% success rate. Walkley is ranked #41 out of 4761 analysts.