Reinventing the Millennium

A Singaporean semiconductor company that is relocating to the United States will spend huge sums of money to acquire Qualcomm?

What did Avago think?

What does Qualcomm think?

What about U.S. regulatory authorities?

And, no one seems to care what Singapore thinks.

Qualcomm, which has been surrounded by negative news recently, is caught in acquisition doubts, which is really shocking.

However, Qualcomm has indeed reached its weakest moment. Since the development of CDMA, it has developed rapidly in the 2G era and dominated the 3G era. Although it still has a leading position in 4G today, the version update has changed the competitive landscape of the industry. .

It was precisely at this time that companies such as Yike and Apple stepped forward to suspend payments and supply, engage in patent litigation, and made breakthroughs in the field of baseband chips...

The secondary market has used the evaporated market value to express its views on Qualcomm's future development.

However, just Anhua Gao...

A Nasdaq-listed company with a market value of more than 20 billion US dollars may not use the word "mere", but this is indeed the first impression of many people, and the second impression under numerous media reports is that this company has only been established for less than 10 years. The company was developed in 1999 by using capital leverage to carry out mergers and acquisitions.

After all, Qualcomm continues to invest huge amounts of money in research and development and launches truly excellent products. How dare you Avago to "take advantage of others"?

Although Qualcomm has quite a monopolistic behavior, the mainstream media in the United States have a relatively consistent view on the acquisition, painting Avago and its leader Chen Fuyang in a negative light.

According to media tracking, Qualcomm executives have come out one after another to express their stance, not only resolutely refusing to be acquired, but also belittling Avago's development and Chen Fuyang's achievements.

For nearly a week, Avago has not initiated any further action, and a new question arises: will it come to acquire it?

On May 16, the acquisition offer that had been criticized whether for, against or questioned was finally launched. Avago announced that it would launch an acquisition of Qualcomm at a price of US$50 per share, of which US$37.5 would be paid in cash and the remainder in shares. Form expression.

In other words, Avago made an offer with a market value of 74 billion, which is US$2.5 billion more than Qualcomm's current market value.

At the same time, CEO Chen Fuyang also disclosed the relocation plan, planning to complete the company's relocation before Q4 of 2014, using the US headquarters in San Jose as the global headquarters, and Singapore as the Asian headquarters.

It’s really here!

I really want to relocate, I really want to take money from financial institutions, I really want to acquire Qualcomm!

Qualcomm's nerves inevitably became tense, and the media sparked a frenzy about hostile takeovers. The stocks of the two companies in the secondary market were shaken by true and false news.

On this day, Fang Zhuo, who had been stuck in China for a while, boarded the "Qingzi" flight to Houston. In addition to attending Yao Ming's retirement ceremony, he would also attend a lawsuit between Yike and Qualcomm.

Of course, it would also be nice to see the excitement of Avago and Qualcomm up close.

Although Fang Zhuo provided a clue to this matter, the main decision on whether Avago will adopt a strategy of changing ownership depends on Chen Fuyang. After all, if Qualcomm really acquires Avago in turn, he may not be able to penetrate the shareholders. He ascended to the position of CEO through the conference, and he might actually be a wedding dress for Qualcomm.

Facts have proved that Chen Fuyang, who is good at using leverage, does have the courage to give it a try.

"Mr. Fang, do you think Qualcomm will be successfully acquired by Avago?"

Zhang Yaqin, president of EBG, the Emerging Industries Division, who was also on the "Qingzi", was looking for a topic in idle boredom. His trip this time was to inspect the Yike Data Center in Houston, and the major events happening to his competitors were naturally equally eye-catching.

"No." Fang Zhuo said succinctly.

Zhang Yaqin was surprised: "Why?"

Fang Zhuo asked a little strangely: "Don't they generally think it won't?"

Zhang Yaqin thought about it, oh yes, yes.

But when he thought about it again, no, what surprised him was Mr. Fang's determined attitude.

"However, Avago has received loans from many institutions. Morgan Stanley and the others obviously feel that there is no chance." Zhang Yaqin considered and pointed out the people who voted with their feet.

So far, Avago has received more than 80 billion US dollars in loans, otherwise it would not have the courage to acquire Qualcomm.

"There is no risk if Avago fails to acquire it. If you lend the money, you will make a profit. Avago's own market is also good." Fang Zhuo said with a smile, "Avago's acquisition of Qualcomm is just a farce."

Seeing the boss's understatement, Zhang Yaqin nodded: "As long as they make trouble, it will be a good thing for us. It's really an unexpected surprise to have Anhua Gao show up this time."

Fang Zhuo smiled, which was half an unexpected surprise.

After a moment, he said: "You have to be strong to strike, let's see how this appeal goes."

What we most hope to see now is that Yike will resolve the lengthy patent litigation first, and then no matter how Qualcomm changes, Yike will be confident.

Fortunately, Avago's acquisitions often take a long time, not to mention that there is still a drama behind it.

"Mr. Fang, did Luzhou's 20nm process go well this year?" Zhang Yaqin changed the topic.

Fang Zhuo signaled Liu Zonghong to add some tea to Mr. Zhang, pondering over how to answer his question. Otherwise, everyone should go to sleep. This conversation was about something that was not easy to talk about.

In the end, he replied: "Dr. Liang's main focus this year is to develop more advanced manufacturing processes. This is a technical matter..."

Zhang Yaqin was horrified after hearing half of this sentence and tasting the taste and changes in it.

He was a little unsure whether what he heard was accurate. He was asking about 20nm. Is this more advanced process going to be developed at the same time as 20nm and 16nm, or... going directly to the latter one?

If that were the case, the implications and changes would be huge.

Zhang Yaqin couldn't help but glance at Mr. Fang, but saw that he was there with no special expression.

Maybe there is a misunderstanding.

After all, Zhang Yaqin joined Yike not long ago. The thought in his mind turned around and he clicked on it. However, he suddenly lost his interest in chatting and focused on thinking about the fate of Yike and Bing Xin.

After the "Qingzi" landed in Houston after a long flight, there was new news about Avago's acquisition of Qualcomm.

This time it was not a Qualcomm executive or Qualcomm COO. Finally, it was CEO Jacobs who stepped forward to respond to Avago’s acquisition offer and immediately rejected it on behalf of the board of directors.

Avago quoted in the morning, and Qualcomm declined in the afternoon.

Jacobs conveyed the board's decision extremely calmly to the media: "The board of directors has teamed up with legal and financial advisors to evaluate the offer from Avago, but its price is obviously not in line with shareholders' earnings expectations and cannot reflect the company's performance." actual value.”

"We will not sell Qualcomm to Avago."

"In addition, I don't think Chen Fuyang has enough ability to lead a company like Qualcomm. He may be able to convince financial institutions such as Citigroup, Deutsche Bank, and Morgan Stanley to provide funds, but he cannot convince us to recognize his capabilities in the semiconductor industry."

"A highly innovative company like Qualcomm will not be handed over to businessmen obsessed with capital acquisitions and acquisitions."

Jacob directly commented on the aggressive Chen Fuyang.

Chen Fuyang immediately responded to such comments. He was not afraid of the statements of Qualcomm executives, but was afraid that they would not express their opinions. The truth becomes clearer with more arguments.

"A person with sufficient leadership will not push Qualcomm into recession."

"The founder of Qualcomm is Irving Jacobs, but Qualcomm is a modern company. Without Irving Jacobs, I don't think Jacobs would be able to become the CEO of Qualcomm."

"I am a shareholder of such a CEO, and I have already proposed to remove him."

"The market capitalization has dropped from 100 billion to less than 70 billion. Is this in line with shareholders' earnings expectations? Does this reflect the actual value of the company?"

"Externally, former customers like Yike and Apple are engaged in patent litigation, but internally there is no business development at all. Is this the 'sufficient leadership' that Jacob claims to have?"

"Qualcomm's current board of directors can no longer represent the interests of all Qualcomm shareholders. I urge all Qualcomm shareholders to think about the future of the company."

Chen Fuyang responded eloquently, also targeting Jacob personally.

Moreover, what he said is true. Qualcomm's recent situation does seem to be more dangerous.

The heads of the two companies involved invariably conveyed their attitudes through the media and commented on each other, which attracted more and more interested people.

However, as it is the weekend, the direct impact on the stock price cannot be seen for the time being, which leaves all parties to accumulate analysis.

$74 billion!

This is the largest acquisition in the semiconductor industry!

Moreover, Avago obviously still has spare capacity. The credit line obtained from financial institutions has not been exhausted, and there is still the possibility of raising prices.

So……

Can Qualcomm be swallowed up based on a $74 billion acquisition?

Wall Street analysts gave their judgment: "Although Qualcomm is facing competition from Yike in the baseband chip market, and although it has started patent litigation with Apple and Yike, it is still the world's leading chip company, let alone one year later." The current market value is firmly above US$100 billion, and Avago’s price is obviously lower.”

But different analysts have different judgments: "Times have changed. Yike baseband chips are not as good as Qualcomm in the short term, but they will soon catch up to a close position. With its breakthrough, Huaxia, which occupies a large share of Qualcomm, will The market will lose, Qualcomm has lost Apple again, there is a reason why it fell to $70 billion, and Qualcomm shareholders should seriously consider Avago's offer."

On Saturday, analysts, media and people with different positions expressed their opinions one after another, as if they could influence the movement of US$74 billion.

On Sunday morning, a tidbit of news leaked that could really sway the acquisition story a little bit.

——According to sources, Yike’s Selfy series products are likely to abandon Qualcomm Snapdragon chips and switch to their own Zhurong chips.

After losing a big customer like Apple, Qualcomm seems to be losing another big customer.

Yike used to be Qualcomm's closest partner. The Android machine king Mars helped Qualcomm gain a lot of high-end chip market share. The leader Fang Zhuo and Jacobs are known as the "Iron Triangle".

However, as Yike launched its own Zhurong chip, the two companies became both cooperative and competitive.

By this year, Yike has baseband chips and Zhurong chips, and has accumulated a number of communication patents. The proportion of competition is increasing, which has directly become one of the key reasons for Qualcomm's sharp decline in market value.

And today, this last cooperative relationship seems to be torn apart.

Although Slefy is positioned as the imaging flagship in Yike, it is also a series of products that are well received by consumers and is also valued by Qualcomm.

At such a time when Qualcomm is facing a hostile takeover, Yike silently sends a signal that it is completely turning to competition, and its intentions are not without sinister intentions!

Jacob called Fang Zhuo immediately after receiving the news and said angrily: "Mr. Fang, are you the one who adds insult to injury like this?"

Fang Zhuo automatically translated Jacob's words into idioms in his mind, and asked naturally: "Qualcomm sued Yike and requested a ban on the sale of Yike's mobile phones. What are you talking about?"

"It's you who didn't pay the patent fee!" Jacob was very angry.

"I'll pay the patent fee, as long as Qualcomm doesn't charge monopoly fees based on the whole machine!" Fang Zhuo also raised his voice.

"Did the court rule that we have a monopoly? It was you, Yike, who lost the case!" Jacob criticized.

"Is this the final judgment?" Fang Zhuo replied, "I flew to the United States this time specifically for the lawsuit!"

Knowing that there was no result, Jacob sneered: "Do you want to defeat Qualcomm in this way? Mr. Fang, don't be too naive!"

Fang Zhuo lowered his voice at this time and reiterated patiently: "Yike is willing to maintain cooperation with Qualcomm and conduct patent licensing negotiations, but it must be based on a reasonable framework, not the monopoly conditions set by Qualcomm, Jacob, I have to say, I am willing to talk to you, as long as you don’t create a monopoly.”

Jacob listened to the calm voice on the other side, and his emotions were stirred up even more: "Qualcomm has patents, and Qualcomm can authorize it however it wants. It was you, Yike, who lost the case, not me, Qualcomm, who lost the case like this with Avago." If Chen Fuyang joins forces, don’t blame us for seeking a stricter ban.”

"Nokia once had a patent monopoly. Nokia fell. Qualcomm was not the first, nor will it be the last. I believe in the law, the judges, and the Circuit Court of Appeals!" Fang Zhuo said firmly, "Jacob , stop it, even Avago is here to buy you."

——I believe in the law, I believe...

Fang Zhuo's voice echoed through the cell phone in the Court of Appeals.

The three judges from the Ninth Circuit Court of Appeals panel listened with interest to the phone call recording from the head of Yike. Seeing the ridicule and abuse, Mr. Fang turned off his phone and couldn't help but feel a little regretful.

"You see, even at this moment, I am still willing to ensure communication with Jacobs. This is our sincerity in patent cooperation at Yike."

Fang Zhuo stood in the court and talked. The latest recording from Jacob was just a small piece of evidence. The focus was on the interactions over the past period and the application of the legal terms he fought for.

The Exhaustion Doctrine, the principle of exhaustion of rights.

First Sale Doctrine, the first sale principle.

When Fang Zhuo finished his part, he just sat down when a new message was quietly sent to him on his mobile phone. Affected by Yike's suspension of cooperation, the stock price of Qualcomm, which was initiated to be acquired, remained volatile and did not show the usual rise. .

This will undoubtedly reduce the pressure on Avago's acquisition and will also make Qualcomm shareholders further think about the current company situation and earnings expectations. (End of chapter)