A number of major Chinese Android phone makers officially opposed Broadcom’s proposed takeover of Qualcomm, citing innovation concerns. ZTE, Xiaomi, and BBK Electronics-owned OPPO and Vivo also spoke out against the deal earlier this week, as did Lenovo’s subsidiary Motorola. The consensus among China’s original equipment manufacturers is that a theoretical merged entity would have too much power in the industry and completely dominate the mobile chip market, thus lacking an incentive to continue aggressively investing in research and development of new, disruptive technologies.
Mobile modems allowing for wireless connectivity have been named as a particular point of concern in regards to the deal as such a consolidation would effectively leave most OEMs with only a single choice of a supplier. While none of the companies talked about the financial implications of the move, recent reports suggest many are worried about price hikes in the mobile chip segment should Broadcom successfully seize control of the San Diego, California-based semiconductor firm. Xiaomi co-founder Lin Bin personally voiced his concerns about the proposed merger, saying that the move could jeopardize the growth of the mobile industry if it ends up slowing down innovations in the field. OPPO was more focused on Broadcom’s background than competitiveness but ultimately made the same argument, with one of its officials saying the firm is much more proficient in acquiring technologies than developing them, GizmoChina reports.
The public defense of Qualcomm’s independence on the part of China’s largest smartphone manufacturers comes shortly after they signed a memorandum of understanding with the chipmaker, vowing to purchase $2 billion worth of RF chips from it in the future. The two sides are also closely collaborating on 5G R&D and have just announced a separate initiative meant to ensure the commercialization of 5G-ready Android handsets in 2019. With their long-term supply deals with Qualcomm already being in place, the Chinese firms likely want to avoid a scenario in which they’d have to negotiate them with less leverage due to a lack of global competition in the mobile chip sector. Broadcom launched an unsolicited bid for Qualcomm in late 2017, proposing by far the largest acquisition in the history of the tech industry worth $105 billion. The approached company refused the deal, citing major regulatory concerns and its belief that it severely undervalues Qualcomm’s assets. Broadcom is presently trying to replace Qualcomm’s board with its own director nominees who are prepared to sell the firm. Qualcomm’s board will be up for re-election at its annual shareholder meeting scheduled to take place on March 6th.
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