M&A Rumors: INTC, AVGO/BRCM, QCOM. Facts versus deductive guesses and why we care here at SEQUANS
INTC is in the news via WSJ.com reporting a rumor. Well, I am taking a different approach based on news facts and drawing a different conclusion via deductive reasoning. Here's my calculus:
1) Intel has purchased AVAGO business in the past which means they have a good line of communication that includes strategic planning - those AVAGO businesses don't get listed on Craigslist... y'know.
2) I have posted on the other site many times that: AVAGO has planned to divest unwanted units from its own M&A activity many times in the past and we have seen those divestments reduce the actual cost of M&A for AVAGO, including the recent Broadcom M&A.
3) I have deduced and posted on the other site the current QCOM M&A almost certainly follows the same path: planned divestment of overlapping redundancies to eliminate those redundancies and presenting those plans IN ADVANCE to REGULATORS including CFIUS, and reduce the actual cost of, and the objections to M&A.
So, from those three points I deduce that today's rumor is nothing more than advance awareness that INTC is interested in some of the units of QCOM that AVGO is planning to divest: Atheron is my first guess due to WiFi redundancy with the BRCM unit, Hynix would be my second guess. And I suggest you review again below the Intel M&A news including LSI and AXXIA below for clues to what INTEL is up to and why ERIC suffered so dramatically over the last 18 months.
Here at SEQUANS we care about this M&A activity because it is more consolidation news that also leads to SCALE for the consolidated businesses. And, this follows on the heels of RUCKUS making a ruckus about its own need to add RF IP for its products. If it is known in the biz that INTC is bulking up its router biz and perhaps planning to seed it to China as it did with its Picochip gateway biz then there is reason for Ruckus and others to plan their own M&A.
So... in this season of M&A I consider it good news for a small cap firm that has executed with excellence on its R&D programs to be willing to sell itself.
Now, I hope the Board at SQNS is more willing on this go-round to consider the desperate, existential need for SCALE via some legal merger with a bigger buisiness that can be a market maker strong enough to survive Chinese Huawei and ZTE advances in the market. If that M&A is with Chinese owners or Western owners, I don't believe we have enough info as outsiders to judge the merits.
Good luck to the Board
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CURRENT RUMOR NEWS
wsj.com
Intel May Intervene in Broadcom’s Effort to Buy Qualcomm
Intel, facing a threat, considers deals that could include a giant bid for Broadcom
By Dana Mattioli and Dana Cimilluca Updated March 9, 2018 Intel Corp. is considering a range of acquisition alternatives in reaction to Broadcom Ltd.’s hostile pursuit for Qualcomm Inc. that could include a bid for Broadcom, according to people familiar with the matter...
cnbc.com
Intel reportedly considers bid for Broadcom
Intel is considering a number of acquisition options.
uk.pcmag.com
Intel's opposition to the merger adds another wrinkle. The company's other fallback plans include making smaller acquisitions, according to The Wall Street Journal...
cnet.com
OLD REFERENCES
2016---
ocbj.com
Broadcom Sells Another Unit May 9, 2016 Broadcom Ltd. has agreed to sell its wireless infrastructure backhaul business for $80 million to MaxLinear Inc. in the latest divestiture led by Chief Executive Hock Tan. The sale continues to trim the Irvine operation of Broadcom, which is based in Singapore and has its U.S. headquarters in San Jose... The divestiture is Broadcom’s second in less than two weeks. The company in late April sold its Internet of Things business for $550 million to Cypress Semiconductor Corp. in San Jose. The IoT business and WICED brand, which have been around for a few years, were based at the company’s University Research Park campus and employed about 430 worldwide. The latest cash buy builds on MaxLinear’s developing microwave backhaul RF transceiver business that often relies on wireless connections if fiber optics isn’t available to push through data and calling services from cell phone or radio towers. The Carlsbad-based company recently acquired broadband wireless assets and certain liabilities from Aliso Viejo-based Microsemi Corp. for $21 million. Microsemi became the largest OC-based chipmaker after the Avago deal for Broadcom closed. MaxLinear maintains a location in Irvine and is OC’s 6th largest chipmaker with 118 employees through October, according to Business Journal research.
oregonlive.com
Broadcom says it will hire 229 at Hynix's former Eugene factory, wants $21 million tax break Hynix's Eugene chip factory closed in 2008, costing 1,400 people their jobs. Broadcom says it would employ 229 when it reopens the facility in 2019.
By Mike Rogoway May 09, 2016 at 2:06 PM The new owner of Hynix's defunct memory chip factory in Eugene says it will hire 229 people when it reopens the factory and plans to spend $400 million bringing the 18-year-old facility up to speed... Communications chip company Avago paid $21 million for the factory last fall. It subsequently bought another chip company, Broadcom, and took Broadcom's name... The 1.2-million-square-foot factory had 1,400 workers when Hynix shuttered it in 2008 amid a downturn in the memory chip market... Broadcom has indicated it would make components for mobile phones inside the 1.2-million-square-foot factory. It plans to start construction on the site in June 2017 and begin production in Eugene in September 2019...
2015---
lightwaveonline.com
Avago agrees to sell optical modules business to Foxconn Interconnect Technology September 30, 2015 Author Stephen Hardy Editorial Director and Associate Publisher
On the heels of agreeing to acquire communications semiconductor supplier Broadcom Corp., Avago Technologies Ltd. has moved to streamline its operations by selling its optical modules business to Foxconn Interconnect Technology Ltd. (FIT). FIT is a wholly owned subsidiary of Hon Hai Precision Industry Co. Ltd. Terms of the deal are unknown... FIT CEO Sidney Lu wrote that the company will acquire "the subsystem business and related assets" of Avago's Fiber Optic Products Division. Avago also has agreed to license designs and technology to FIT as well as serve as FIT's exclusive supplier of optical components, Lu wrote. Avago has further agreed to act as worldwide sales agent for its former optical subsystems line after the deal closes through a strategic partnership with FIT. FIT will continue to sell its existing fiber-optic-related products... The fact that Avago will supply optical components to FIT implies that it will keep its hand in such technology to some degree. However, the modules business may have been seen as a less attractive fit for the company if it plans to focus primarily on semiconductors (or at least product lines with similarly attractive margins) once the Broadcom acquisition closes...
2014---
eetindia.co.in
Servers meet base band in C-RAN Posted: 30 Oct 2014 ... One of the biggest challenges is getting servers to handle the real-time requirements of physical layer base band processors. "It's pretty ugly, because the closer to the antenna you get, the more real-time it gets." Ideally, some base band traffic should traverse round-trip paths at milli- or even micro-second speeds. However, time constraints are still "fuzzy, because it's more about the user experience and the Internet experience," he said. At first, Sonnier expects hybrid designs that let servers handle session- to application-layer jobs, offloading lower-level work to accelerator cards. "A classic server works for the control plane... but today won't handle transport functions and Layer 2 and down very well."
C-RAN
Sonnier expects base station makers such as Ericsson and Nokia Networks to specify semi-custom versions of SoCs like Avago's Axxia to handle the low-level base band tasks. Intel is acquiring Avago's Axxia group. In the long term, it will presumably look for ways to integrate server and base band functions. ASOCS is working with Hewlett-Packard on a x86 server rack using ASOCS's modem technology on FPGA cards that will be available by April. The company was an early pioneer in base band silicon and C-RAN software, working with carriers in China and Korea. As for networks, Sonnier said that carriers will have to run optical fibre links at 20-40 Gbit/s or more between remote antennas and server farms in some cases. For small areas such as auditoriums, 10G Ethernet could be adequate. Software poses several challenges, he said, because carriers will want C-RANs to use their current code. "You will have much of the same software in all parts of the network, because the classic macro base stations won't go away."...
eetasia.com
Intel delivers 3G chip for IoT Posted: 26 Aug 2014 Intel rolled out the industry's smallest 3G cellular modem that comes with an integrated power amplifier... The modem has its heritage in the Infineon wireless group Intel acquired in 2010. In a separate move to expand its presence in networking, Intel recently acquired an ARM-based SoC from Avago.
fierceenterprisecommunications.com
Intel acquires network chip maker Axxia from Avago, buys itself some time
In one of the most rapidly growing new markets in the history of technology, Intel may have made a strategic play that brings diverging paths into some kind of alignment. August 14, 2014 | By Scott M. Fulton, III ... Axxia's top-of-the-line model AXE4500 is based on ARM technology, not anything it gained through mergers or acquisitions. And its midrange AXE3500 and starter AXE3400 are repackaged PowerPC components from IBM. Why would Intel possibly want a company that basically repackages and resells its two chief competitors' parts? One possibility is that it eliminates one of the world's producers of ARM and PowerPC products in networking. Anyone who seriously believes Intel would go on producing a networking component with an IBM part in peace and harmony, need only read yesterday's blog post from Intel's Rose Schooler with a magnifying glass: "To enable this vision, we believe that running the four critical network workloads (application, control, data and signal processing) on a single architecture provides benefits by reducing development complexity and risk," Schooler writes (although I've added boldface). "Intel's goal is to offer a common architecture approach that scales up and down at many different price, power and performance points." There's no way Intel will ever put two platforms in one of its enterprise products. So does all this merger and convergence and synergy merely lead to what a chip designer might call a "terminal node?" Maybe not. One clue as to what Intel really bought--and what it really needs--comes from this LSI white paper (.pdf) produced just prior to the completion of its Avago merger, so not long ago. It's a position paper on SDN, and it notes that the plurality of parallel projects to standardize network virtualization is making standardization difficult. "LSI proposes the use of intelligent silicon for a new scalable alternative to solve emerging complexities with SDN protocols such as OpenFlow and, in general, the dynamic nature of software defined orchestration overlays," the white paper reads. "As SDN is deployed, it is inevitable that datacenters will operate with hybrid networks with some OpenFlow and non-OpenFlow traffic. It is important for the line cards to evolve towards this hybrid state to support OpenFlow traffic gracefully. LSI proposes utilizing flexible Axxia acceleration engines to solve the hybrid network element both for data plane acceleration in addition to performing intelligent control plane acceleration." This is what's worth $650 million, and maybe that's a bargain. If Intel can move Axxia's SDN property onto Intel silicon, then it can produce a complete SDN server platform the same way Centrino was a complete network client platform.
eweek.com
Intel to Buy Avago Network Chip Business for $650 Million By Jeffrey Burt | Posted 2014-08-14
Intel is adding to its networking efforts by buying LSI's Axxia networking business from Avago Technologies for $650 million... In a blog post, Rose Schooler, general manager of Intel's Communications Infrastructure Division, wrote that the move will help Intel compete in the $16 billion wireless access silicon space, an important market as system and device makers look to put more intelligence and connectivity into their products as part of the growing Internet of things...
mobile.reuters.com
Avago to sell LSI's Axxia Networking Business to Intel for $650 million Wed, Aug 13 (Reuters) - Avago Technologies Ltd (AVGO.O) said it agreed to sell LSI's Axxia Networking Business to chipmaker Intel Corp (INTC.O) for $650 million in cash. The Axxia business mainly includes networking and infrastructure products for wireless networks and enterprise gateways. Avago bought LSI in December last year for $6.6 billion, and has been divesting units as it seeks to counter volatility in its main wireless business and focus on the fast-growing storage chip market. The company, which designs and develops analog semiconductors and was once part of Hewlett-Packard Co (HPQ.N), said in May it would sell LSI's flash storage business to hard drive maker Seagate Technology Plc ... |
