Lhe factories – rather called “fab” – of semiconductors are not very reassuring, with their clean rooms where men dressed in coveralls, also white, and wearing masks and goggles produce one of the most precious resources in the world. They are worth, depending on the size, between 3 and 10 billion euros. We understand why the world number five in the sector, the American Broadcom Inc., was able to announce, Thursday, May 26, the acquisition of the software and remote computing (cloud) publisher VMware for 61 billion dollars ( 57 billion euros), even in an environment where technology stocks are taking a toll on the stock market.
If successful, the operation will be the largest of the year, after the announcement of the acquisition of Activision Blizzard by Microsoft in January for 67 billion dollars. It is hardly surprising in the middle of Big Tech. Broadcom CEO Hock E. Tan has been known for his insatiable appetite since his company Avago Technologies took over the chip group in 2016. A year later, he was trying to swallow rival Qualcomm, a deal to 130 billion dollars blocked by Donald Trump, who saw it as an attack on the security of the United States because of the installation of the headquarters of Avago in Singapore.
Since then, Broadcom’s headquarters have been located in San José (California). And the takeover of VMware, a former division of Dell Technologies owned 40% by Michael Dell, does not have the same meaning as the “Qualcomm operation”. It does not aim to make it the great rival of the American Intel or the Taiwanese TSMC in chips, but to diversify the offers to companies (chips, software, virtualization, cloud, etc.) and to make it, according to Mr. Tan, “a leader in technological infrastructure”.
By forced march
This is not its first diversification: in 2018, the group got its hands on CA Technologies for 19 billion dollars; and in 2019, on the business security division of the computer security group Symantec for nearly 11 billion. A man observes the movement closely: Pat Gelsinger. Ex-boss of VMware and now CEO of Intel, he warned, on the American channel CNBC, against “a purely financial agreement”. Before adding: “Why not, if it allows a dynamic cycle of innovation. » However, some industry analysts have found no such innovations in Broadcom’s diversification.
The forced transformation and the very capital-intensive dimension of the activity of chipmakers (chipmakers) are pushing for consolidation in a booming market. Present everywhere (cars, smartphones, computers, consoles, industrial machines, etc.), “chips” generated 556 billion dollars in sales in 2021 (+ 26% in one year), and this amount should double in 2030, calculate manufacturers .
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