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In a filing with the Securities & Exchange Commission, Qualcomm has told the government that it expects to lose a large portion of its chipset licensing business, worth more than $4 billion a year, under Broadcom’s proposed ownership — including $1 billion in annual revenues from two customers.

The filing follows a public letter published on Friday to Broadcom CEO Hock Tan that suggested that Qualcomm was open to an offer substantially higher than the $121 billion amount laid out in a second bid for acquisition. It also laid doubts about Broadcom’s ability to pull off a deal and its capacity to compensate Qualcomm if it falls through.

The San Diego-based company reiterated claims that Broadcom has yet to make any meaningful start to regulatory approval of a combination, adding that the very uncertain process would take at least 18 months. Furthermore, Qualcomm has brought up antitrust potentials as it is skeptical that Broadcom can successfully maneuver divestitures and regulators.

The key passages regarding the negative impacts on revenue are as follows:

[Why would shareholders support this deal, given:

[…]

That Broadcom has said it will radically alter Qualcomm’s licensing practices, which would damage, if not destroy, the value of the $4+ billion licensing business. We believe Broadcom’s strategy is mainly to trade licensing revenue for chip share at higher prices. And while the deal is pending, infringers may take a wait-and-see approach, refusing to pay.

That two customers providing Qualcomm chipset revenues in excess of $1 billion each per year have stated that they are likely to move designs away from Qualcomm in the event that this transaction moves forward. This is due to their lack of confidence in Broadcom’s ability to continue to lead in technology.

Broadcom has publicly admitted to a new evaluation of Qualcomm’s licensing business, thus potentially entirely warding off customers like Apple and Samsung. Qualcomm has been embroiled in legal imbroglios with Apple along with several government agencies over anti-competition concerns, but there has been chatter in the supply chain about having the chipmaker’s parts completely removed from new iPhones. And while Samsung recently inked a big cross-licensing deal with Qualcomm, it may be more hesitant and conservative in navigating the length of the contract.

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