Last week, chip giant Broadcom made an unsolicited takeover bid for Qualcomm, Broadcom’s rival and the largest manufacturer of modems and processors for high-end smartphones. A deal would have huge implications for the semiconductor business, and by extension, seriously change how smartphones are designed and made.

But Qualcomm, whose stock price has plummeted thanks to an ongoing legal dispute with Apple, announced this morning that it’s rejecting Broadcom’s unsolicited offer.

“It is the Board’s unanimous belief that Broadcom’s proposal significantly undervalues Qualcomm relative to the Company’s leadership position in mobile technology and our future growth prospects,” said Paul Jacobs, Executive Chairman and Chairman of the Board of Qualcomm Incorporated.

“No company is better positioned in mobile, IoT, automotive, edge computing and networking within the semiconductor industry.  We are confident in our ability to create significant additional value for our stockholders as we continue our growth in these attractive segments and lead the transition to 5G,” said Steve Mollenkopf, Chief Executive Officer of Qualcomm Incorporated.

Those two statements, put out alongside the news that Qualcomm is rejecting the bid, go some way to showing the gameplan here. Qualcomm’s reason for rejecting the offer — “Broadcom’s proposal significantly undervalues Qualcomm” — hints that the company may be more receptive to a higher bid. Broadcom’s initial bid totaled about $105 billion.

A takeover move from Broadcom right now appears to be a shrewd attempt to capitalize on Qualcomm’s current low stock price. Qualcomm is in the middle of a legal dispute with Apple, which could well end up having a huge impact on Qualcomm’s business strategy. Currently, Qualcomm sells processors and modems to handset manufacturers on the condition that those manufacturers also pay for the use of Qualcomm’s patents, through a royalty fee than can be as much as 10% of a phone’s selling price. Apple has balked at the amount it’s paying to Qualcomm, and is seeking to renegotiate those terms. If Apple is successful, other manufacturers could follow suit, and Qualcomm would be in a world of hurt.

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