Broadcom sidelines wireless, plans unit sale

Chip giant is hardly ever out of the M&A mix and is now reportedly seeking to sell its RF chip unit for up to $10 billion.

December 23, 2019

2 Min Read
Broadcom sidelines wireless, plans unit sale

Having decided that wireless is no longer a core part of its business, Broadcom is reportedly seeking to sell its RF unit for up to $10 billion, with one industry analyst believing one of its largest customers, Apple, could be a likely buyer.

The move to sell the RF unit was first reported by the Wall Street Journal following Broadcom's fiscal fourth quarter and full year earnings report conference call, during which the chip giant's President and CEO, Hock Tan, noted that the wireless and industrial businesses were "standalone" in nature and no longer regarded as "core."

The particular business that is up for sale, the RF unit -- which produces power amps, FBAR (film bulk acoustic resonator) filters and duplexers used in smartphones -- generated revenues of US$2.2 billion in the financial year that ended November 3. During the earnings conference call, Broadcom's CFO, Thomas Krause, noted that the RF business is expected to grow its revenues in the high single digits (so, likely by 7-9% year-on-year) thanks to the increasing production of 5G devices.

Broadcom has two other wireless businesses, one focused on WiFi/Bluetooth chips and another that produces mixed signal custom products that are sold mostly to one large smartphone customer (believed to be Apple).

In a blog posted on the Strategy Analytics website, the firm's director of RF & Wireless Components, Chris Taylor, noted: "Given the dynamics of the cellular radio chip market, we expect radio chip suppliers MediaTek, HiSilicon, Samsung, Apple, Skyworks and Murata to have an interest in Broadcom's RF business unit. Given the recent challenges to acquisitions of US technology firms by Asian companies, we think Apple could be the strongest contender."

Since abandoning its $117 billion bid to acquire Qualcomm, Broadcom has focused on building up a more software-oriented portfolio to add to its core networking, broadband and storage chip business: Last year it splashed $18.9 billion on CA Technologies and this year acquired Symantec Enterprise Security for $10.7 billion.

In its full financial year, Broadcom reported an 8% year-on-year increase in revenues to $22.6 billion, but a 33% dip in operating income to $3.44 billion. For the full details, see this earnings release.

— Ray Le Maistre, Editor-in-Chief, Light Reading

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