MediaTek is the biggest competitor of Qualcomm in the smart phone SoC market. Research company Counterpoint data showed that in the third quarter of last year, Qualcomm’s share in the global smart phone SoC market was 42%, and MediaTek’s share was 14%.

Since the stock price hit a new high in July 2014, the stock price of MediaTek has dropped by nearly 40%. This is mainly due to the slowdown in sales of smartphones and competition from Qualcomm. Despite this, MediaTek’s SoC chips are still widely used in mid-range and low-end smartphone from manufacturers such as Samsung, Xiaomi, Sony and Lenovo…etc.

In previous period, people generally believed that Intel might acquire MediaTek. In fact, MediaTek is also a potential target for Broadcom. At present, Broadcom provides many parts for smart phones, such as power amplifiers and touch screen controllers, but if to bundle with MediaTek’s SoC, it will help Broadcom win more shares in low-end devices.

It is reported that Apple has planned to use Intel and MediaTek modems instead of Qualcomm in future iPhone and iPad products. At present, Broadcom is already a major supplier of Apple. Therefore, the provision of a modem component to Apple after the acquisition of MediaTek will further increase Broadcom’s profit sharing on Apple devices.

The current market value of MediaTek is approximately US$17 billion, and Broadcom’s acquisition of Qualcomm’s offer is US$117 billion, it is quite a breeze for Broadcom to acquire MediaTek.