Xiaomi is worried - Qualcomm acquisition could bring price rises

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Xiaomi, Oppo and Vivo have expressed concern that Broadcom could acquire Qualcomm.

The three companies are concerned that the Qualcomm acquisition could lead to price increases and reduced innovation. The buyer is none other than Broadcom. In December, Google and Microsoft expressed similar concerns about the deal.

Concerns about Qualcomm's travails began about two months ago. That's when Broadcom announced a very promising buyer, with an offer of $130 billion. Chinese smartphone manufacturers Oppo, Vivo, and Xiaomi are not happy about the deal.

The The Wall Street Journal -executives from all three companies said they were concerned that Broadcom would increase the price of its chips if it took over Qualcomm. That's because all three manufacturers mostly (Xiaomi already almost entirely) offer smartphones that contain Broadcom and Qualcomm chipsets.

According to the statements, Broadcom would cut Qualcomm's research and development spending, which could cause them significant damage in the long run. Oppo, Vivo, and Xiaomi executives say Qualcomm's developments have helped them access new mobile technologies, which is particularly important given the chipmakers' current plans for 5G.

The concerns of the three companies are also justified, as they signed a no-obligation agreement with Qualcomm back in November. Under the agreement, the three companies will purchase $12 billion worth of Qualcomm components (processors) over the next three years. As the agreement does not protect the parties from possible significant price increases. Therefore, the agreement is useless if there is no guarantee of discounts for the 3 years.
Broadcom risks that Oppo, Vivo and Xiaomi will turn to other suppliers. Xiaomi has already unveiled its own alternative in the person of the Surge S1 processor, and we're hearing about its upcoming successor. So it has given its own solution if it is forced to replace Qualcomm chips due to excessive price increases.

The merger itself is not that simple, however much Broadcomm would like to see the gigabit deal go through. Qualcomm's board of directors rejected Broadcom's original $105 billion offer. Despite the fact that Broadcom has secured a seat on the board for the future. This decision will only last until March, after which the deal will be put to a shareholder vote.
If the deal is approved at some point, it is likely to be subject to regulatory scrutiny in a number of countries, investigating Qualcomm and Broadcom's operations around the world.

You can expect to read about the Broadcom and Qualcomm case in the press in the coming months. As soon as there are any changes, positive or negative, concerning Xiaomi, we will be sure to let you know.

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