According to reports, Broadcom CEO Chen Fuyang (Hock Tan) recently said in a media interview, after the acquisition of VMware for $ 69 billion, Broadcom will continue to seek more M&A transactions, including the acquisition of semiconductor companies.
Through a series of bold acquisitions, Tan has built Broadcom into a $250 billion technology giant. Now, although Chen Fuyang is 71 years old, but will continue to serve as Broadcom CEO for five years. He said in an interview that Broadcom would still consider acquiring the semiconductor company, even though a 2018 deal to acquire Qualcomm for $142 billion in a hostile takeover was blocked by the U.S. government at the time.
Last May, Broadcom announced it would buy cloud computing company VMware for about $69 billion, one of the largest tech deals ever and one that would make Broadcom a strong competitor in the software space. The deal is still under review by U.S., U.K. and European regulators.
Chen Fuyang said the acquisition remains a key part of Broadcom’s strategy, despite the increased scrutiny of large technology M&A deals. Broadcom maintains a “select” list of “potential acquisition targets,” he said. Some of the companies on this list are in the semiconductor sector, and some are in the software sector.
Whatever Broadcom’s next big move, Chen Fuyang intends to continue leading the company, even though he is past the age when most executives retire. I just signed another five-year contract,” he said. I’m happy with what I’m doing now.”
The VMware acquisition comes on the heels of several large M&A deals by Broadcom, including acquisitions of semiconductor company LSI, networking technology maker Brocade, large software company CA and the enterprise security business of cybersecurity firm Symantec.
Looking back, Chen Fuyang said his biggest mistake in the Qualcomm acquisition was initiating a “hostile merger. “The only real way to make an acquisition is to do it on a friendly, fair basis,” he said.
While trying to appease regulators, Chen Fuyang also faces another threat: Apple could replace the Broadcom wireless chips used in its iPhones with chips of its own design. Apple is Broadcom’s largest customer, contributing about 20 percent of sales for Broadcom last year.
Chen Fuyang said that despite the great success of Apple’s other chip designs, Broadcom is confident in engineering technology to surpass Apple. He said: “Apple focuses on technology, with technology to sell their hardware products. Therefore, I believe they will use the best technology (i.e. Broadcom’s technology).”
Like Apple and most companies in the electronics supply chain, Broadcom is re-evaluating where it sources and manufactures its products. Previously, Broadcom also suffered product shortages and supply disruptions due to the epidemic.
Broadcom is also outsourcing the manufacturing of its semiconductors, with the exception of very few specialized parts. Chen Fuyang said he is also considering Intel as a potential new foundry partner as an alternative to its main supplier TSMC.
