TAIPEI -- MediaTek, the world's second-largest mobile chip provider after Qualcomm, on Wednesday denied that it was in merger talks with Singapore's Broadcom.
MediaTek Chief Financial Officer David Ku said in a statement to the stock exchange that his company has not engaged in talks or activities related to any merger or acquisition with Broadcom, one of the most aggressive tech acquirers in the world.
MediaTek shares closed lower 1.9% at 336 New Taiwan dollars on Tuesday, shedding some recent gains, after it refuted a report in the local Economic Daily that its Chairman Tsai Ming-Kai met with Broadcom Chief Executive Hock Tan last week in Singapore to discuss a transaction. However, MediaTek stock has risen around 5% this week after financial services media outfit Motley Fool noted that it could become Broadcom's next target besides semiconductor manufacturers Xilinx and Cirrus Logic.
Although MediaTek's Ku dismissed the market rumor as "groundless," an industry source told the Nikkei Asian Review that Broadcom did contact MediaTek to show interest in buying the company. In 2017, Broadcom's Tan visited MediaTek in Taiwan although it's not clear the reason for his trip and the details discussed in the meeting, another industry source said on Wednesday.
The semiconductor sector is undergoing a consolidation wave as companies seek new growth drivers. Deep-pocketed technology companies and internet giants like Apple and Google also all want to enhance their own chipmaking capabilities to cut reliance on suppliers, turning the heat up on competition in the sector.
Broadcom's bid to take over the world's largest mobile chipmaker Qualcomm collapsed after U.S. President Donald Trump blocked the deal citing national security concerns on March 12. MediaTek's market capitalization is around NT$531.3 billion ($18.2 billion), far lower than Broadcom's $117 billion offer for Qualcomm.
MediaTek supplies to most of the Chinese smartphone makers including Huawei, Oppo, Vivo, Lenovo and Xiaomi and it also provides chipsets to Samsung Electronics' mid- to low-end phones. The group also makes chips for televisions, setup boxes, and is a supplier to Amazon Echo smart speakers.
Broadcom, on the other hand, is an Apple supplier providing high-end Wi-Fi chips for iPhones and it's also a global supplier of networking processor chips and data center switch chips for telecommunication equipment. The chipmaker was formed when Avago Technologies bought Broadcom in 2016 for $37 billion and kept the name. It also closed a deal in November to buy U.S.-based networking gear maker Brocade Communications Systems, a rival of Cisco.
Qualcomm controls around 36% of the market for mobile application processors and MediaTek some 24% in 2017, according to research company Gartner.
MediaTek also acquired some of its smaller peers in recent years, including smart TV chip designer MStar Semiconductor and power management chip provider Richtek Technology.
Broadcom was not immediately available for comment.