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A crazy semiconductor merger possibility

count

Active member
Hock Tan should buy Intel.

Intel perfectly fits the profile of the type of company that Broadcom targets. Mature product, strong franchise, high margins, lots of fat to cut, relatively cheap valuation. Sure Intel has a larger market cap than Broadcom right now... but just barely and not for long. Of course it'll be difficult for Hock Tan to navigate the anti-trust concerns and the politics of having an important US company bought by a company with close ties to China. It's fun to speculate anyway.
 
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Paul2

Member
Hock Tan should buy Intel.

Intel perfectly fits the profile of the type of company that Broadcom targets. Mature product, strong franchise, high margins, lots of fat to cut, relatively cheap valuation. Sure Intel has a larger market cap than Broadcom right now... but just barely and not for long. Of course it'll be difficult for Hock Tan to navigate the anti-trust concerns and the politics of having an important US company bought by a company with close ties to China. It's fun to speculate anyway.
He tried with Qualcomm. Antitrusts cancelled the deal.
 

count

Active member
He tried with Qualcomm. Antitrusts cancelled the deal.
I'd argue that there aren't really any serious Antitrust concerns in an Intel/Broadcom merger as there aren't many overlapping products unlike with Qualcomm. That said, having two of the largest semiconductor companies merge would still raise eyebrows. I actually think national security concerns would be a bigger hurdle to a potential merger, and would probably be impossible to get over. It's still a pretty interesting idea though... especially since just a few years ago Intel was looking to potentially acquire Broadcom itself.
 
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hist78

Active member
I'd argue that there aren't really any serious Antitrust concerns in an Intel/Broadcom merger as there aren't many overlapping products unlike with Qualcomm. That said, having two of the largest semiconductor companies merge would still raise eyebrows. I actually think national security concerns would be a bigger hurdle to a potential merger, and would probably be impossible to get over. It's still a pretty interesting idea though... especially since just a few years ago Intel was looking to potentially acquire Broadcom itself.
Why Broadcom (an American company) to merge with Intel (also an American company) will pose national security concerns?
 

herbs88

New member
Why Broadcom (an American company) to merge with Intel (also an American company) will pose national security concerns?
hist78
The current Broadcom was actually Avago Technologies which bought the original Broadcom in 2014. They have renamed themselves to Broadcom since 2016. Avago was jointly based in Singapore and San Jose. Chinese from southeast Asia in general are often believed to have strong ties with the CCP government.
 

hist78

Active member
hist78
The current Broadcom was actually Avago Technologies which bought the original Broadcom in 2014. They have renamed themselves to Broadcom since 2016. Avago was jointly based in Singapore and San Jose. Chinese from southeast Asia in general are often believed to have strong ties with the CCP government.
herbs88,

Legally Broadcom is an American company headquartered in San Jose, California. In 2018 Broadcom bought CA Technologies in a US$18.9 billion deal. Then in 2019 Broadcom bought enterprise business and cybersecurity company Symantec for US$10.7 billion. In additional to serve many American corporations, CA Technologies and Symantec count US government agencies (such as Department of Defense and Department of Energy) as customers. If US government allowed Broadcom to acquire these two American companies who are handling sensitive data day and night, why all of sudden they have objections on the Intel deal, if it happens?
 

hkwint

Member
count: Yeah, that was what I have been thinking and joking the last few years: If Broadcom would have taken over QCOM, the only bigger company left 3x their current value would have been Intel.

Now, what I would do as BCOM is form a consortium.

You may remember, just before the crisis, how Barclays bid $68B for ABN Amro bank.

Much smaller Fortis bank wanted ABNA, but didn't have the money. So they formed a consortium with RBS and Santander and offered $80B together. To defend itself, ABN sold LaSalle to BoFa, and all 4 buying banks went technically bankrupt and, except for Fortis, were bailed out. But it shows the strength of a consortium!

So if I were Hock Tan, I'd make a consortium with Broadcom for Intel design department, TSMC for leading edge nodes and GloFo for trailing edge nodes / specialty. Ask Achronix if they want old Altera.

Moreover, I'd involve Apple to -together with TSMC - start leading edge Axx SoC fabrication in the US in INTC fabs, to decrease geographic risk.

Now, who started the chain reaction to carve up ABNA? Well, it was an activist shareholder (hedge fund); TCI.

And like ABNA had TCI, INTC has Daniel S Loeb.

All Loeb would have to do, is take the seed of the thought "Intel being more worth if a consortium buys it".

And then planting that seed in the brains of INTC shareholders. It works; ABNA history shows.
 

count

Active member
count: Yeah, that was what I have been thinking and joking the last few years: If Broadcom would have taken over QCOM, the only bigger company left 3x their current value would have been Intel.

Now, what I would do as BCOM is form a consortium.

You may remember, just before the crisis, how Barclays bid $68B for ABN Amro bank.

Much smaller Fortis bank wanted ABNA, but didn't have the money. So they formed a consortium with RBS and Santander and offered $80B together. To defend itself, ABN sold LaSalle to BoFa, and all 4 buying banks went technically bankrupt and, except for Fortis, were bailed out. But it shows the strength of a consortium!

So if I were Hock Tan, I'd make a consortium with Broadcom for Intel design department, TSMC for leading edge nodes and GloFo for trailing edge nodes / specialty. Ask Achronix if they want old Altera.

Moreover, I'd involve Apple to -together with TSMC - start leading edge Axx SoC fabrication in the US in INTC fabs, to decrease geographic risk.

Now, who started the chain reaction to carve up ABNA? Well, it was an activist shareholder (hedge fund); TCI.

And like ABNA had TCI, INTC has Daniel S Loeb.

All Loeb would have to do, is take the seed of the thought "Intel being more worth if a consortium buys it".

And then planting that seed in the brains of INTC shareholders. It works; ABNA history shows.
Like I said, it's fun to speculate ;)

If a path around the regulatory hurdles can be found, I think it would be a really great deal. Obviously Broadcom is not going to want the fabs, so have those split off first. That could happen without a consortium with enough activist pressure. So spin off or sell the fabs first. I think Broadcom would want Altera, but not the self driving stuff. So spin off Mobileye next. Between the foundry and Mobileye businesses, Intel should be able to conservatively pick up $50-80b. So then it's around $120b for the rest of Intel. I think Hock Tan could pull off a deal of that size.
 
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Daniel Nenni

Admin
Staff member
Hock Tan is due for something big and he seems to be able to get financing. He would certainly trim that tree.
Like I said, it's fun to speculate ;)

If a path around the regulatory hurdles can be found, I think it would be a really great deal. Obviously Broadcom is not going to want the fabs, so have those split off first. That could happen without a consortium with enough activist pressure. So spin off or sell the fabs first. I think Broadcom would want Altera, but not the self driving stuff. So spin off Mobileye next. Between the foundry and Mobileye businesses, Intel should be able to conservatively pick up $50-80b. So then it's around $120b for the rest of Intel. I think Hock Tan could pull off a deal of that size.

I seriously doubt anyone will want the Intel fabs unless Intel pays someone to take them. Like the IBM or AMD fabs, some serious money is going to have to exchange hands, absolutely. It would need to be an asset sale with the land being the biggest value, once it is cleaned up.
 

Portland

Member
Hock Tan is due for something big and he seems to be able to get financing. He would certainly trim that tree.


I seriously doubt anyone will want the Intel fabs unless Intel pays someone to take them. Like the IBM or AMD fabs, some serious money is going to have to exchange hands, absolutely. It would need to be an asset sale with the land being the biggest value, once it is cleaned up.
That's a frightening comment.
 

count

Active member
Hock Tan is due for something big and he seems to be able to get financing. He would certainly trim that tree.


I seriously doubt anyone will want the Intel fabs unless Intel pays someone to take them. Like the IBM or AMD fabs, some serious money is going to have to exchange hands, absolutely. It would need to be an asset sale with the land being the biggest value, once it is cleaned up.

Yeah, I can't see anyone talking them without a wafer agreement at the least.

Another alternative is sell Mobileye, don't sell the fabs, treat them as a run off business. Stop putting in money, depreciate them and close over the next 3-5 years. The think I like about the idea of Broadcom taking over Intel is Hock Tan doesn't believe in sacred cows. He will kill off anything in Intel that isn't profitable and eliminate all the dead weight MBAs running little fiefdoms all over the company.
 

Paul2

Member
A tidbit about Tan, he became the king of concrete market in Malaysia long before he even hit 40 I believe. He is rather monotonic in the execution, he find a product for which he can corner a market, and keeps banging until the market for the product is cornered.

Saddest thing about the strategy is that people are very eager to give him money, and pool in their own capital in his activities because of his 100% successful track-record of doing this.

Such strongly differentiable products like CPUs are not his strength, but telecom SoCs doing pretty much one thing only (running Android, and getting cell connection) are.
 

count

Active member
A tidbit about Tan, he became the king of concrete market in Malaysia long before he even hit 40 I believe. He is rather monotonic in the execution, he find a product for which he can corner a market, and keeps banging until the market for the product is cornered.

Saddest thing about the strategy is that people are very eager to give him money, and pool in their own capital in his activities because of his 100% successful track-record of doing this.

Such strongly differentiable products like CPUs are not his strength, but telecom SoCs doing pretty much one thing only (running Android, and getting cell connection) are.
I'm familiar with Tan and his strategy. Broadcom is a rollup company, I'm aware of that. Rollups aren't about cornering commodity markets, they are about maximizing value out of mature businesses. Intel has been more or less acting in this way for the last several years, focusing on pricing and marketing strategies as opposed to engineering and innovation. Hock Tan would be doing the same thing, except with more self awareness and without the bloat. The semiconductor world no longer needs Intel to be an innovator anymore, it's already moved on.
 

Daniel Nenni

Admin
Staff member
If China has a say there will be no more mega mergers. Nvidia/ARM seems to be a longshot with the current political climate. Meanwhile the CEO of ARM China is making many millions of dollars of his ARM related investments. Interesting times.
 
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