HomeNewsAvago buys Broadcom to create semiconductor hero

    Avago buys Broadcom to create semiconductor hero


    Avago Technologies has bought Broadcom in a deal worth $37 billion (€33.7 billion), as it aims to create a communications semiconductor giant.

    The Singaporean company is paying for Broadcom with $17 billion in cash and the remaining $20 billion in equity. Avago said it expects the deal to be completed by the end of the first quarter of next year, so long as it meets shareholder and regulatory approval.

    Broadcom has been working on a wide range of chipsets, targeting the connected cars, 5G and Internet of Things sectors in recent months.

    The combined company will be named Broadcom Limited. Hock Tan, Avago’s President and CEO, will continue to serve in the same role in the new company. Henry Samueli, co-founder of Broadcom, will be the company’s CTO and fellow co-founder Henry T Nicholas, will serve in a strategic advisory role. There appears to be no place in the new company for current Broadcom CEO Scott McGregor.

    It will challenge Intel, Samsung and Qualcomm for semiconductor market supremacy. According to figures from Gartner, Broadcom was eight place in the semiconductor revenue market last year, with sales of $11.5 billion. Intel was top with $50.8 billion worth of sales.

    Tan said: “The combination of Avago and Broadcom creates a global diversified leader in wired and wireless communication semiconductors. Avago has established a strong track record of successfully integrating companies onto its platform. Together with Broadcom, we intend to bring the combined company to a level of profitability consistent with Avago’s long-term target model.”

    Nicholas added: “The culture that Henry and I created when we founded Broadcom was demanding, execution-oriented, and certainly not guaranteed to mesh with the average technology company.

    “It was, however, a culture that enabled Broadcom to grow exponentially and emerge as the market leader in every major market segment involving broadband communications. In Avago, we have found a culture and a management team that embody the best of the philosophies on which Broadcom was founded, together with a fast-paced, no-nonsense, process-driven business culture that we need to take our combined company to the next level.”