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With Qualcomm conducting a strategic review, under pressure from activist investor Jana Partners to break itself in two, there is plenty of speculation about the likely outcomes.
Some believe that, if the company does split its licensing and chip technology businesses (see Wireless Watch August 23 2015), the latter would become prey for an acquirer, probably Intel, and so continue the ongoing wave of M&A among semiconductor firms.
Reuters calculates that the Qualcomm chip business would be valued between $30bn and $40bn and could attract Intel as a way, finally, to achieve a strong position in the wireless market. Other analysts speculate that the division could be a target for Samsung, or for a Chinese group (despite the likely US government blocks).
But it remains true that, without the licensing arm, the chip unit is far less valuable than it currently is. It would be deprived of the profits from the patents royalties, which help to fund Qualcomm's massive investment in R&D, which in turn helps the chips to remain at the cutting edge.
Qualcomm itself is thinking in terms of being the acquirer, not the prey. CEO Steve Mollenkopf told Bloomberg: "Qualcomm is very likely to be some form of actor in the consolidation of the semiconductor industry … The timing of which is always the debate." The company will look at acquisition opportunities as part of its strategic review process, he said.
While not identifying possible targets, he said Qualcomm wants to expand outside its traditional handset sector into growth markets like connected cars and healthcare. It has already made substantial developments in these areas but could accelerate the ROI with an acquisition.
He also noted that the firm is better placed to make a major purchase now it has settled its antitrust lawsuits in China, bringing greater predictability to its revenues there. "It's an interesting time to be a scale player in the semiconductor industry, particularly from a position of strength," Mollenkopf said. "We've had strategic flexibility, but it's important that you have your home business well structured for the future first."
Among recent chip acquisitions are Intel's of Altera, NXP's of Freescale, and Avago's of Broadcom, leaving limited options in the top tier for Qualcomm. Nvidia, or even the combined NXP/Freescale, might be targets, speculate Wall Street analysts.