Qualcomm buy to make Broadcom a giant in India

In India, the mobile devices market constitutes more than 50% of the semiconductor business by revenue and is the most attractive market

Broadcom’s audacious $100-billion bid to buy out chipmaker Qualcomm, if it goes through, will make the former the largest player in the Indian market among application processors for mobile devices. 

In India, the mobile devices market constitutes more than 50 per cent of the semiconductor business by revenue and is the most attractive market. 

Currently, Qualcomm is the leader in this market with a market share of 33.8 per cent, according to GfK Global estimates for the first quarter of 2017, just ahead of Taiwanese chip design company MediTek, which has a 33.3 per cent share.

But the US company dominates the more high-value long-term evolution (LTE) processor market, in which it has a 33.4 per cent share, compared to MediTek’s 10.6 per cent. 

With the Indian market shifting dramatically to 4G LTE, given the big push by Reliance Jio and now Airtel, Broadcom could hold sway in this market. 

Already Jio has over 140 million 4G LTE customers in a market that has over 350 million smartphone users. With telcos trying to woo the more than 500 million feature phone customers (who are on 2G) to 4G LTE, increasing the requirement for more application processors powered by 4G LTE, this equation is expected to change dramatically. 

According to analysts, Qualcomm has been able to expand its business on the strength of supplying to Vivo and Xiaomi, which have seen significant growth in the country. It is also believed that the Jio feature phone, which is expected to sell in millions, is powered by Qualcomm.

Currently, however, Broadcom is not a major player in this market, where, apart from Qualcomm and MediTek, the other three players in the pecking order are Spreadtrum, Samsung, and Apple. 

The story is replicated even in the global market, where Qualcomm and MediTek battle it out for the top slot, with the former being much ahead, in the mobile devices market. They are followed by Apple, Spreadtrum, and Samsung. 

Broadcom could strengthen its research and development in India. According to reports, the company has been betting big on the country and has more than 1,500 employees working on R&D in the wireless network and video technologies. It says that India is among the largest R&D bases for the company outside the US. 

Qualcomm, on the other hand, has a strong R&D presence in the country. The company has invested $8.5 million in expanding its design initiatives, which include funding its labs in Hyderabad and Bengaluru. 

It has also been quick to see opportunities. For instance, it was among the first to launch a chipset to power an affordable eco system of mobile devices for 4G LTE. 

Qualcomm’s Snapdragon processors have been used by all leading mobile device players, including Motorola, OnePlus, Redmi, and Lenovo. 

Qualcomm, which is in the forefront of bringing in 5G technology, has predicted that India will be ready to launch the services by 2022.