Good monday morning, welcome to squawk alley. Im Carl Quintanilla with john fortt, sara eisen at post 9 of the new york stock exchange. What a morning for tech, john. Yes, indeed broadcom confirming its takeover bid for qualcomm the cash in stock offer valued at 70 per share, or 105 billion, excluding debt. Qualcomm acknowledges receiving the offer. For more were joined by a tech analyst at William Blair and analyst at Rbc Capital Markets is on the phone. Actually, i want to start with you, amit. So, broadcoms side argues, i had a chance to have a few conversations this morning, that qualcomm hasnt traded at 70 a share since a year ago its been three years since it was at 80, so this actually represents fair value, but weve seen qualcomm under pressure now from apple on the licensing front. A year ago, and before that from china, though it was able to resolve much of that does that argument hold water in your view . Yeah. Thanks for having me, guys ill say, you know, factually they are right qualcomm has not traded at 70 in a while, since the apple litigation started, and i do think one of the big levers is, a, i can integrate this asset much more efficiently operationally, they have a good history, but the second thing may just be broadcom and apple have a much more cohesive partnership in contrast to the hostility and lawsuits you have between qualcomm and apple, so broadcom may think, and we think its fair that they could resolve these regulatory litigation issues more easily than qualcomm is doing right now. Neil, are investors really fed up enough with qualcomm to totally give up on this highly profitable licensing model especially given that they were able to work out a lot of these issues with the chinese oems more than a year ago before these latest issues with apple cropped up, because it seems they have to be fed up with this Management Team to throw in the towel and embrace broadcom, or am i seeing this wrong no, you bring up a good point, but first of all, thanks for having me this morning i just want to bring out a couple of points the first thing, in my opinion, this announcement is a Pivotal Moment both on the licensing front and chips front and far reaching implications in the Consumer Electronics world as amit referred to on the licensing front, this could mark a new benign environment that broadcom will take versus qualcomm now, while you said, rightly so, that some of these litigation issues have been resolved, they are still a thorn for many on the chips side, this will create a Massive Company and we can expect the pricing economics move towards a Semiconductor Industry on the deal itself, theres so many moving parts. Youve got the part that is unresolved, the licensing part, some are speculating softbank may be involved in it. I do not believe the current status, both on nxp and licensing will be as is with broadcom something has to give way. And finally i expect qualcomm to fight back this is a company that never wanted to decouple their licensing business from their chips business so expect a lot more fireworks over the next six months to whenever this is going to close. Whats it say about overall not just maybe this particular deal, but broadcoms overall m a appetite, where does it end . At what point would their appetite be sated . Well, its a great question for them but listen, i think theyve been very complicit, they believe there are a host of semiconductor companies, qualcomm is just a big one, that are run inefficiently with a high optics structure. Qualcomm has a 15 m a structure, broadcom has 4 they believe its logical to play the consolidator. If they have the deal done, the only thing to look up to would be intel and samsung at that point. John, i was going to ask you, because i know youve been covering this long running battle between qualcomm and apple, it appears from a lot of the analysts reports, like these guys were talking to, that they deal view this deal favorably. Do you see that . Yeah. I mean, because broadcom has the relationship right in order for this to make sense as an investor, you have to believe that qualcomms licensing model is outdated, that somehow the apples of the world have the leverage and they are not going to be able to get paid this high amount for their technology so you have to think the stock price doesnt belong up at 85 or 90 a share. If qualcomm were up there, it would be worth more than broadcom in the first place. These two companies are very close together in value. So im not of course, apple would want this to happen, because broadcom is implying through this that their relationship with apple, theyd be demanding less, theyd be basing it perhaps more on the chip set business, less on that high profit licensing, but i just wonder if investors, given qualcomms track record and working these things out but being tough and insisting on high profit, if investors are going to throw in the towel on qualcomm well see once they start making their case one way or the other, though we, of course, expect not. Anil, final word from you, the antitrust concerns, Regulatory Environment we dont really know from the Trump Administration this would be, what, number three in terms of global chip makers behind intel and samsung . Absolutely. And you bring up a very, very important point, because what will happen is that youre going to have these Massive Semiconductor companies that for the first time will have pricing power. If you look at the overall Semiconductor Industry, weve not seen a lot of ipos or innovation so what i believe over the next decade, you could potentially see a super cycle of innovation in the Semiconductor Industry where the big boys are not really innovators, but more scale players, and you have the new guys coming through ipos innovations with all the new ideas. All right, were going to need more m a reporters. Weve got some pretty good ones, i think were okay anil and amit, thanks for joining us meantime, the other top story we are following for you, an anticorruption crackdown sweeping across saudi arabia this morning among those arrested, government ministers and prominent members of the countrys royal family, including prince bentalab. What does this send to investors . Well, certainly a purge of the rich and the powerful, a major crackdown that targeted big business leaders, as well as former and current government ministers, as well as members of the royal family and the charges, possible charges sweeping everywhere from this crackdown that we say the crown prince is trying to force on corruption, as well as to the possibility of money laundering, as well as abuse of power. Its interesting to note that the crown prince came out and said the message is now clear, this is a topdown sweep and no one is immune or above the law we mentioned alwalebb, chairman of Kingdom Holdings with high profile investments, those shares traded down for a second day, unsurprising there, but it was interesting to note this was as the Company Released a statement, the ceo saying he does believe they have the full support of the saudi government. Now, over the last several hours weve heard more and more reports that the saudi government has already begun freezing accounts and assets of those named in wrong doing, but well just have to wait and see what happens next. In terms of what the Investor Sentiment, originally shares were trading down yesterday in saudi arabia, but over the last several hours we saw a pick up in Investor Sentiment and the idea being this is not only solidifying the power of the crown prince, but showing theres a push to end corruption and to improve transparency. Guys hadley gamble, thank you very much for that. For more on the anticorruption purge in saudi, were joined by James Jeffrey, former ambassador to iraq and turkey and former security adviser to president bush ambassador, good to have you back, good morning thank you, good morning weve had some guests on this morning who say it is, indeed, a coup of sorts. Others say its a more fematically pure crackdown on corruption are you somewhere in the middle . Where are you in this . This is dramatic, because hes going after major elements of the ruling saud family in order to consolidate power it is about corruption, because theres a lot of that and its hamstringing the entire growth of the economy, which he is committed to, but hes basically assembled in his hands all security and diplomatic power, all energy power running the initial Public Offering of aramco and the opec production cuts, and the reforms of the country under this vision 2030 plan that will move saudi arabia away from its reliance on oil, move it away from reliance on the old way of doing things, which includes corruption, and against the chokehold that the religious leaders have on the country. This is a huge thing and he needs a lot of power to do this, but assembling all of that power means that he cant afford any slipups so you think in terms of capital flow in or out of the country its more of an encouragement than an inhibitor . I think two things. First of all, saudi arabia was heading for disaster i was over there and talked to him a year ago, and they were eating up about 70 billion a year of the Sovereign Wealth Fund to support their budget and their military activities in yemen because of the low price of the oil what he has to do is to diversify the economy, somewhat like iran has diversified its economy, while also trying to find a way to get oil prices up. He succeeded to some degree with that with the 60 a barrel weve seen recently, but whether this vision to create a, if you will, a dubai and a Silicon Valley in saudi arabia will work or not, we dont know. That will be determined whether investors in the long run see saudi arabia as a good option. Ambassador, to carls question, what happened this weekend, the consolidation of power, how should Global Investors view that . Isnt it just a reminder this is sort of an autocratic system and if you do pour money into it as a banker you could get tangled up in some of these corruption charges and scandals with prominent investors like prince alwaleed sure, but that was a problem before i do think that the crown prince is sincere about fighting corruption thats in all of his body language, and it is an important problem, but hes going to use the massive corruption as a way to build popularity among young saudis thats his target audience if he can succeed in that and develop the rest of the economy, this idea of Silicon Valley, plus dubai, as well as a big gas station for the world, then he will have made a remarkable transition the problem is, because he is going after a lot of sacred cows, theres some risk to stability. Ambassador, what convinces you that this isnt replacing one type of corruption with another, and whos behind the crowned prince in this at 32 years old, perhaps hes come up with this himself, but it seems unlikely. His father is behind him. I also met with his father, the king, but its very clear his father has basically passed the baton to bin salman, so whos behind him are technocrats and others who want to see a more modern saudi arabia because they know the current model based on Oil Wont Work in the 21st century with what were doing in america and elsewhere with the shift in energy markets, so this is the right approach to take, and hes not going to eliminate all corruption what hes going to do is eliminate the massive unchecked corruption with tens of thousands members of the royal family getting involved in it. It will now be fewer people, it will be more under control, more like china than russia, if you will ambassador, we have to go, but really quick, what happens to alwaleed . To who . Prince alwaleed in the end all of these guys somehow survive. The royal family is not going to be putting people in jail for a long time or executing people. Ambassador James Jeffrey joining us on saudi. Ambassador, thanks again thank you good color there. When we return, the latest on the president s fivecountry trip across asia well go live to seoul, where hes going to head tomorrow. Busy day in tech between broadcom, qualcomm, nasdaq at record highs well talk to morris mark. And then well have microsofts newest gaming atnsole, the xbox 1x at post 9, wh it means for the gaming industry when squawk alley returns in a minute. Meet grant. His family. His steinway, which met a burst pipe. So grant met his insurance you are caller number 12. Which didnt quite cover the steinway. But what if hed met pure insurance . Owned by members. Hed have met lisa, your member advocate. Whod introduce him to gustav, a temporary address, and help him get tickets to the mozart festival. Excuse me, grant likes beethoven uh, the beethoven festival. Pure. Love your insurance. President trumps tour of asia is under way. Live to Kayla Tausche in seoul, south korea. Kayla, what can we be expecting . Good morning, sara. Trade on this trip is just one of the dialogues taking place. The other, of course, is the ongoing situation in north korea. Just about an hour north of where im standing right now there have been some important developments, specifically this week today we got some symbolic new sanctions from seoul and tokyo, tightening the screws on their neighbor for the first time, if only symbolic in nature. The u. S. Treasury and state departments put new sanctions on individuals and on Financial Institutions in china in just the last week and the president says the u. S. Could very soon make a decision on whether to name north korea an official state sponsor of terror. That could even happen on this trip here in seoul there have been peaceful protests for and against trumps strategy with pyongyang. Protesters are calling out trumps comments that if people die in this escalation theyd die, quote, over there and so far its reported that 8,000 police will be on hand for trumps wednesday speech at the national assembly. Recent polls show that 60 of people here in south korea have a favorable view of the United States many also are in favor of u. S. Military assistance, but a lot of them that we spoke to today say that they are worried about how President Trump is approaching north korea. Translator now that north korea and u. S. Are confronting each other, i feel more worried. We are more fearful there might be a war as a korean, im worried translator since trump was elected as president , the relationship between u. S. And korea has been worsening translator instead of him making strong statements on north korea, i hope we can have a peaceful resolution through dialogue and meetings with north korea. Senior Administration Officials tell reporters that the campaign to isolate north korea is both economic and diplomatic, but with the president openly questioning his chief diplomat Rex Tillerson with abe today saying its not the time for dialogue and south koreans here doubting whether a diplomatic was ever even open, that route appears to be elusive. For now guys, back to you. Kayla, thank you very much for setting that up from seoul, south korea. Tonight our Kayla Tausche. For more on the president s trip to asia were joined by elizabeth economy, Foreign Relations director of asia studies. Welcome back, elizabeth. Nice to see you. Great to be here. So, clearly north koreas top of mind for south korea. Is President Trump going to get any help that hes been seeking from china, or is he getting that behind the scenes when it comes to fighting north korea . Yeah, i think President Trump has actually been reasonably successful over the past ten months or so in getting the chinese to ratchet up the sanctions that it is willing to place on north korea you know, from a chinese perspective, what they want to do is have the United States and north korea sit down at the table and negotiate. They put forth this proposal for freeze for freeze, where the u. S. Would freeze our military exercises with south korea and north korea would freeze all testing. Problemmatically, neither north korea nor the United States appears interested in this particular proposal, so i think President Trump is going to go to beijing and ask them to do more hes going to ask them to turn off the oil spigot, because there is a belief within the white house that that is actually the key to putting enough pressure on north korea to get them to the negotiating table in a weakened position how do you marry that with what the president is also going to ask for on trade . Obviously, investors are watching this as the most consequential economic relationship in the entire world. How does he do that dance of trying to get that trade deficit narrowed and its much bigger than japan or south korea, and also get what he needs on north korea right, so our trade deficit with china is the largest one that we have and the president has pledged to make progress on it and to date, in fact, it looks as though the trade deficit is only going to grow over the course of 2017. But, you know, although the president has made a linkage with north korea and trade saying maybe were willing to take a softer line on trade if youll do more on north korea, thats not really the way the chinese play the game. They themselves have tried this kind of coercive practice and failed and i dont think they are going to be swayed in any way to do more on north korea, because of what were willing or not willing to do on trade i think the president has signalled some unhappiness with china in terms of levying tariffs on aluminum foil hes threatened additional tariffs. I dont think those are goin