Avago Technologies Ltd, a Singapore-based maker of semiconductors, has agreed to buy wireless chipmaker Broadcom Corp for US$37 billion in the industry’s biggest acquisition ever.
Avago is to pay US$17 billion in cash and US$20 billion in stock in the transaction, the companies said in a statement.
The offer values Broadcom at US$54.50 per share in cash, compared with its closing price of US$57.16 on Wednesday, when it rose the most since 2001 after reports that the deal was imminent.
The purchase of Broadcom creates the world’s sixth-largest chipmaker by revenue and is the latest in a round of consolidation in the US$300 billion industry as the rising costs of production and design push manufacturers to combine.
Avago has been at the forefront of that wave with several acquisitions, including its US$5.6 billion purchase of LSI Corp at the end of 2013. The flood of deals may be reaching its peak.
“I’ve got my misgivings, this feels very frothy for me,” said Alex Gauna, an analyst at JMP Securities in San Francisco. “This seems like a stretch, like it has a touch of recklessness to it. It seems like a bridge too far to me.”
Broadcom, based in Irvine, California, represents a much bigger target for Avago. While the firm has a greater market value, at US$36.3 billion, Broadcom had higher sales last year, with US$8.4 billion compared with its potential acquirer’s US$4.9 billion.
A deal would be almost twice the size of NXP Semiconductors NV’s pending purchase of Freescale Semiconductor Ltd for about US$16.7 billion, including debt, which was announced in March.
Broadcom shares gained 22 percent to US$57.16 at the close in New York on Wednesday, its biggest one-day gain and highest value since 2001. Avago increased 7.8 percent to US$141.49 after the Wall Street Journal reported earlier that the companies were in advanced merger talks.
RUN IT BACK: A succesful first project working with hyperscalers to design chips encouraged MediaTek to start a second project, aiming to hit stride in 2028 MediaTek Inc (聯發科), the world’s biggest smartphone chip supplier, yesterday said it is engaging a second hyperscaler to help design artificial intelligence (AI) accelerators used in data centers following a similar project expected to generate revenue streams soon. The first AI accelerator project is to bring in US$1 billion revenue next year and several billion US dollars more in 2027, MediaTek chief executive officer Rick Tsai (蔡力行) told a virtual investor conference yesterday. The second AI accelerator project is expected to contribute to revenue beginning in 2028, Tsai said. MediaTek yesterday raised its revenue forecast for the global AI accelerator used
TEMPORARY TRUCE: China has made concessions to ease rare earth trade controls, among others, while Washington holds fire on a 100% tariff on all Chinese goods China is effectively suspending implementation of additional export controls on rare earth metals and terminating investigations targeting US companies in the semiconductor supply chain, the White House announced. The White House on Saturday issued a fact sheet outlining some details of the trade pact agreed to earlier in the week by US President Donald Trump and Chinese President Xi Jinping (習近平) that aimed to ease tensions between the world’s two largest economies. Under the deal, China is to issue general licenses valid for exports of rare earths, gallium, germanium, antimony and graphite “for the benefit of US end users and their suppliers
Dutch chipmaker Nexperia BV’s China unit yesterday said that it had established sufficient inventories of finished goods and works-in-progress, and that its supply chain remained secure and stable after its parent halted wafer supplies. The Dutch company suspended supplies of wafers to its Chinese assembly plant a week ago, calling it “a direct consequence of the local management’s recent failure to comply with the agreed contractual payment terms,” Reuters reported on Friday last week. Its China unit called Nexperia’s suspension “unilateral” and “extremely irresponsible,” adding that the Dutch parent’s claim about contractual payment was “misleading and highly deceptive,” according to a statement
Artificial intelligence (AI) giant Nvidia Corp’s most advanced chips would be reserved for US companies and kept out of China and other countries, US President Donald Trump said. During an interview that aired on Sunday on CBS’ 60 Minutes program and in comments to reporters aboard Air Force One, Trump said only US customers should have access to the top-end Blackwell chips offered by Nvidia, the world’s most valuable company by market capitalization. “The most advanced, we will not let anybody have them other than the United States,” he told CBS, echoing remarks made earlier to reporters as he returned to Washington
RSS