A record deal between the two chipmaker Qualcomm and Broadcom just got cancelled by the White House. The now Singapore based Broadcom offered $117 billion to takeover the american powerhouse.
Broadcom was founded in the United States and its CEO Hock E. Tan even promised in front of the President to move its headquarter back to the United States trying to seduce lawmakers into accepting the deal.
I want to explain you why the merger could have been worrying for the smartphone industry and its consumers.
Patents of Qualcomm and Broadcom
An in-depth report by iam-media.com shows the different areas in which the two companies are innovation leaders. It shows, that Qualcomm introduced 4G and 5G modems to reshape the whole market and how we use wireless technology. Broadcom on the other hand primarily focuses on optimizing processes and reducing costs for already established and innovative technology.
Merging the two companies would definitely form a powerful cooperation from both worlds, but who would benefit from this the most? Companies do not act to server the consumer, but themselves. This is good, because it drives innovation and competition, but if two of the most important companies unite, problems arise and lawmakers rightfully intervene.
Can the consumer really benefit from the merger?
Looking at both companies expertise, a merger seems like a reasonable market move from an economical perspective. But, after Qualcomm already got sanctioned by the European Union for unfair market practices, I see a number of problems coming up.
My initial question would be: would innovation by slowed down if both companies merge together as they don’t have to compete anymore?
Most certainly the expertise of Broadcom to optimize existing technology makes one think, that the pace of innovation will reach different levels. Profits increase, but the consumer will not be introduced to these higher margins and the rapidly changing smartphone and wireless technology industry may stagnate for the sake of profits and internal margin optimization.
You, who is probably reading this article on a smartphone right now, should be worried if gigantic corporations team up and not wave this away easily as it will effect the progress of technology tremendously. These companies create the technological foundation for your favorite brands like Apple, Samsung and others. Do you want to see (even more of) the same phone being released over and over again?
Of course these may all be assumptions and guesses, but I am happy to see politicians intervening to create an even economical playing field.