Three of China’s largest smartphone makers spoke up against Broadcom Inc’s hostile $105 billion bid for Qualcomm Inc, arguing that a combination of the two giant US chipmakers will create a monopoly and stifle innovation.
Xiaomi Corp, Oppo and Vivo, heavy users of Qualcomm-designed chips, on Thursday voiced support for their supplier’s attempt to ward off Broadcom’s unsolicited acquisition attempt. They said they were worried that research and development may sputter should Broadcom take control of its target and dominate the market for the wireless semiconductors found in all smartphones.
Android-based Chinese brands rely heavily on Qualcomm chips. Although they pay royalties to the US company on every phone they sell, its heavy investment in wireless technology lowers the innovation that vendors in Android’s ecosystem have to come up with, making it easier to compete with Apple Inc. While the largest Chinese player, Huawei Technologies Co, is starting to develop powerful chips in-house, smaller rivals such as Xiaomi have come to depend on that arrangement.
“The thing we worry about the most is if it were completed, will there be continued investment in the future?” Lin Bin, a Xiaomi co-founder, said at a Qualcomm-sponsored event. “Without the investment, the entire industry will not grow well. So from this point of view, Xiaomi fully supports Qualcomm.” If Broadcom succeeds in buying Qualcomm – itself seeking to close a deal for chipmaker NXP Semiconductors NV – the transaction could bring a quarter of the chip suppliers used in the iPhone X under one roof.
On Thursday, the three Chinese smartphone makers unveiled an agreement to work with Qualcomm in developing fifth-generation wireless devices, forging an alliance that also included networking gear-maker ZTE Corp. At the launch ceremony, Oppo said Broadcom has a history of financial deal-making but less of a track record in technology development. Executives at ZTE as well as Lenovo Group Ltd’s Motorola also voiced their opposition at the event.
“I’m not very familiar with that company but what I heard was they are good at making financial moves. If that’s the case, I think there’s a possibility of monopoly,” Oppo Chief Executive Officer Tony Chen said. “I don’t think it is good news for the industry and customers.” Vivo CEO Shen Wei puts it more succinctly: “We don’t want changes because they will bring uncertainty.”