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Broadcom’s next Move after the Qualcomm Quash

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Broadcom moving its headquarters

Semiconductor giant Broadcom (AVGO) is on track to shift its offices to Delaware from Singapore in April. Notably, Broadcom had moved its house of operations to Singapore in 2016 after its merger with Avago. Broadcom’s return to the United States is expected to complete on April 4. The company believes that shifting operations to the United States could pave the way for the company to indulge in more US-based business deals, which were earlier restricted due to regulatory issues and foreign laws.

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Broadcom’s dead deal with Qualcomm

Notably, Broadcom’s decision to move its business to the United States comes after Donald Trump stopped Broadcom’s and Qualcomm’s (QCOM) deal talks. The CFIUS (Committee on Foreign Investment in the United States), which looks at deals between the country and foreign companies, had concerns that led to Trump blocking the agreement due to potential national security risks. If Broadcom’s acquisition bid to buy Qualcomm had passed, it would have been the largest acquisition ever in the technology sector.

The deal could have benefited both parties

If the agreement had cleared regulatory issues, it could have helped Broadcom become a dominant player in the global chip space. The acquisition would have given Broadcom control over Qualcomm’s Wi-Fi, Bluetooth, modem, and 3G, 4G, and 5G LTE (long-term evolution) businesses. The deal may also have helped Qualcomm settle its legal disputes with iPhone maker Apple, which is Broadcom’s top customer.

Apple has sued Qualcomm for unfair patent-licensing practices and stopped paying royalties in fiscal 2Q17. Apple is now sourcing chips from Intel (INTC). Notably, the legal issues with Apple have significantly disrupted Qualcomm’s revenue and are expected to continue to do so until the problem is resolved. Qualcomm lost a patent litigation with BlackBerry (BB), which is cutting into its revenue.

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