Apple signs multiple year supply agreements with a major chipmaker
Broadcom shares soared on news of the two new statements of work with Apple
Broadcom investors fell over each other throwing money at the stock today. During the regular trading session, the shares rose $6.77 or 2.16% to close at $319.65. In after-hours trading after the news broke, Broadcom soared another $8.33 or 2.61% to $327.98.
You might recall that in November 2017, Broadcom offered to buy chipmaker Qualcomm; among other things, the firm designs the Snapdragon line of wireless chipsets and wireless modems. The merger proposal was rejected by Qualcomm and Broadcom then rose the price it was willing to pay for the San Diego based company. But Qualcomm said it still wouldn’t be interested unless the price was hiked to $160 billion.
Looking to keep the deal alive, Broadcom moved up its previous plans to establish itself as a U.S. company registered in Delaware. But before this could ever happen, Trump put the blocked the deal. At the time, an official statement from the president read, “There is credible evidence that leads me to believe that Broadcom Limited, a limited company organized under the laws of Singapore (Broadcom)…through exercising control of Qualcomm Incorporated (Qualcomm), a Delaware corporation, might take action that threatens to impair the national security of the United States.”
As with many things wireless these days, the scare over national security revolves around the next generation of wireless connectivity, 5G. Qualcomm’s 5G modem chips will be found in the vast majority of 5G handsets in the states and the Trump administration was concerned, like it is with Huawei, about a foreign country gaining access to private information from U.S. citizens and corporations.
While the president prevented Broadcom from purchasing Qualcomm, it is interesting that nothing is done to prevent Apple from using the company’s components for its 5G phones. Which begs the question, was the national security of the U.S. really threatened by the proposed Broadcom acquisition of Qualcomm?