January 25, 2018 / 5:18 AM / in 7 months

Qualcomm signs $2 billion sales MOUs with Lenovo, Xiaomi, vivo and OPPO

(Reuters) - Qualcomm Technologies Inc 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 Ltd.

A Qualcomm sign is pictured at one of its many campus buildings in San Diego, California, U.S. April 18, 2017. REUTERS/Mike Blake/Files

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

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

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

A man uses his laptop next to Lenovo's logos during the Mobile World Congress in Barcelona, Spain February 25, 2016. REUTERS/Albert Gea/Files

At the event representatives from the Chinese companies expressed concerns that a possible acquisition of Qualcomm 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 Qualcomm 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.

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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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