Interdigital: A Qualcomm Acquisition Target?
Check other articles in the series...By Vijay Nagarajan, Guest Author
The genesis of my question is perhaps the synergies that I found hard to ignore between the two companies –
- The complementary intellectual property (IP) portfolios: The two companies are often in the news due to their legal wranglings. Interdigital recently won a English High Court ruling against Nokia that one of its patents is essential to 3G UMTS WCDMA. With Nokia already locked in a licensing war with Qualcomm, Interdigital patents can only create more value for Qualcomm.
- iPhone and the other smartphones: Qualcomm is the wireless chipset market leader. The iPhone can be its crown jewel. I am sure the company is trying hard to be part of future iPhones. Apple’s propensity to maintain its technology innovator can help Qualcomm’s cause. But as I mentioned in my previous articles, I see Infineon and Interdigital in the 3G iPhone. Besides, Interdigital is slowly making progress in the smartphone market. An acquisition will strengthen and expand on Qualcomm’s leadership position. It will provide a vital segue for Qualcomm as it tries to sell to Apple and the others in this segment.
- Competitive chipset market: Interdigital’s long-term survival as a stand-alone company in the industry is based on the sustained success of its ASIC business. If this initiative fails, the company will die a slow death as 3G gives way to OFDMA-based systems. On the other hand, it can leverage on Qualcomm’s engineering excellence, quality assurance and customer support capabilities to provide its own customers cheaper and better products.
- New offices for Qualcomm: An Interdigital acquisition will usher in more dynamic engineering talent that Qualcomm is always open to. One of the key factors behind the Flarion acquisition apart from the OFDMA IP, was the new blood it brought with it. The teams at King of Prussia, Melville and Quebec will also bring with them diverse experience and office culture that is vital as Qualcomm looks to grow further. Being part of the Qualcomm legacy will not only be a great learning experience for the Interdigital engineering teams in the east but will also lend substantial credence to their work.
- Legal teams: The legal teams can complement each other. Besides, some fresh faces with very relevant experience can certainly help Qualcomm in light of the negative publicity that its legal team has been receiving recently.
My list is not a comprehensive set of synergies but rather pointers to a potentially strong acquisition. Also, at the moment, I don’t see major negatives in such an alliance. However, the question in my mind is the feasibility of such a deal. I will try to answer this question briefly in a sequel. In the meantime, given these synergies, what do you think about a potential Interdigital acquisition by Qualcomm?
This segment is part 6 in a 13 part series Qualcomm Can Acquire →
Jump to part: Visionary Beginning, Rocky Past, A strategic shift, The Infineon Alliance, Inside the iPhone, The Apple deal, A Qualcomm Acquisition Target?, Qualcomm Can Acquire, Valuation Roadblocks, Key Valuation Assumptions, Valuation, Risky Play with Huge Potential Upside, Interdigital, Consolidation?
