Qualcomm still finds love in China via $2b in OEM deals

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REUTERS/Edgar Su/Files

(Reuters) – Qualcomm Technologies has signed memorandums of understanding for sales worth at least $2 billion with top Chinese smartphone vendors, receiving vocal support from the firms as it fights an unsolicited buyout bid from Broadcom.

Lenovo Group, Guangdong Oppo Mobile Telecommunications, Vivo Communication Technology and Xiaomi Communications have expressed an interest in buying components with a total value of no less than $2 billion over three years, the US chip maker said on Thursday.

The non-binding agreement will be subject to further agreements and covers technology related to RF Front-End components, the comoany said in a statement.

The companies announced the multi-year agreement at a Qualcomm-hosted event in Beijing attended by the US firm’s chairman and chief executive.

At the event representatives from the Chinese companies expressed concerns that a possible acquisition by Broadcom could hurt investment in chip technology.

Broadcom in November made an unsolicited $103 billion bid for Qualcomm, which Qualcomm says undervalues it.

A potential merger would likely face regulatory scrutiny in China, where the chipmaker has been fined before over anti-trust issues and where the government is promoting local chip production.

China aims to become a dominant global chip maker by 2030 and has allocated extensive public funding to support local firms.

“I was surprised about the reaction of some of those customers … but it’s probably what you would expect,” Qualcomm President Cristiano Amon told media.

China is currently Qualcomm’s second-largest market but will soon become its top market, said Amon.

(Reporting by Cate Cadell in Beijing and Subrat Patnaik in Bengaluru; Editing by Himani Sarkar and Hugh Lawson)

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