Broadcom Inc is in talks to acquire cloud-computing company VMware Inc, people familiar with the matter said, setting up a blockbuster tech deal that would vault the chipmaker into a highly specialized area of software.
The discussions are ongoing and there is no guarantee they would lead to a purchase, the people said.
VMware has a market valuation of about US$40 billion. Assuming a typical premium, the potential deal price would be higher, although the terms under consideration could not be learned.
Photo: Reuters
The transaction would extend a run of acquisitions for Broadcom CEO Hock Tan (陳福陽), who has built one of the largest and most diversified companies in the chip industry.
Software has been a key focus in recent years, with Broadcom buying CA Technologies in 2018 and Symantec Corp’s enterprise security business in 2019.
A representative for VMware declined to comment. A representative for Broadcom was not available for comment.
In March, Tan told analysts on a post-earnings call Broadcom had the capacity for a “good size” acquisition.
“Investors have been increasingly focused on Broadcom’s appetite for another strategic or platform enterprise software acquisition — especially given the recent compression in software valuation, “ Wells Fargo analysts wrote after Bloomberg News’s report. “An acquisition of VMware would be considered as making strategic sense; consistent with Broadcom’s focus on building out a deepening enterprise infrastructure software strategy.”
Broadcom makes a wide range of electronics, with its products going into everything from the iPhone to industrial equipment. However, data centers have become a critical source of growth, and bulking up on software gives the company more ways to target that market.
VMware, founded in 1998, is a pioneering Silicon Valley company that has already changed hands a number of times. It invented so-called virtualization software, which consolidated applications and workloads on a smaller number of server computers by using each server to handle more than one program.
However, as more tasks moved to the cloud, VMware struggled to keep up growth and carve out a key role for itself. The company eventually forged a close partnership with Amazon.com Inc, one of the biggest providers of cloud storage and services.
Chipmakers like Broadcom have enjoyed booming sales in recent years, fueled by the spread of semiconductors into more products — as well as by the need for work-from-home technology during the pandemic.
However, Tan has warned that the boom times probably would not last.
Even after giving an upbeat sales forecast in March, Tan said that the semiconductor industry would not be able to stay on its current trajectory.
He expects the chip business to decelerate to historical growth rates of about 5 percent.
“If anyone tells you otherwise, don’t believe it, because it has never happened,” he said on a conference call at the time.
Industry leaders claiming that the semiconductor industry can grow at the current rate for an extended period are “dreaming,” he said.
DIVIDED VIEWS: Although the Fed agreed on holding rates steady, some officials see no rate cuts for this year, while 10 policymakers foresee two or more cuts There are a lot of unknowns about the outlook for the economy and interest rates, but US Federal Reserve Chair Jerome Powell signaled at least one thing seems certain: Higher prices are coming. Fed policymakers voted unanimously to hold interest rates steady at a range of 4.25 percent to 4.50 percent for a fourth straight meeting on Wednesday, as they await clarity on whether tariffs would leave a one-time or more lasting mark on inflation. Powell said it is still unclear how much of the bill would fall on the shoulders of consumers, but he expects to learn more about tariffs
Meta Platforms Inc offered US$100 million bonuses to OpenAI employees in an unsuccessful bid to poach the ChatGPT maker’s talent and strengthen its own generative artificial intelligence (AI) teams, OpenAI CEO Sam Altman has said. Facebook’s parent company — a competitor of OpenAI — also offered “giant” annual salaries exceeding US$100 million to OpenAI staffers, Altman said in an interview on the Uncapped with Jack Altman podcast released on Tuesday. “It is crazy,” Sam Altman told his brother Jack in the interview. “I’m really happy that at least so far none of our best people have decided to take them
PLANS: MSI is also planning to upgrade its service center in the Netherlands Micro-Star International Co (MSI, 微星) yesterday said it plans to set up a server assembly line at its Poland service center this year at the earliest. The computer and peripherals manufacturer expects that the new server assembly line would shorten transportation times in shipments to European countries, a company spokesperson told the Taipei Times by telephone. MSI manufactures motherboards, graphics cards, notebook computers, servers, optical storage devices and communication devices. The company operates plants in Taiwan and China, and runs a global network of service centers. The company is also considering upgrading its service center in the Netherlands into a
NOT JUSTIFIED: The bank’s governor said there would only be a rate cut if inflation falls below 1.5% and economic conditions deteriorate, which have not been detected The central bank yesterday kept its key interest rates unchanged for a fifth consecutive quarter, aligning with market expectations, while slightly lowering its inflation outlook amid signs of cooling price pressures. The move came after the US Federal Reserve held rates steady overnight, despite pressure from US President Donald Trump to cut borrowing costs. Central bank board members unanimously voted to maintain the discount rate at 2 percent, the secured loan rate at 2.375 percent and the overnight lending rate at 4.25 percent. “We consider the policy decision appropriate, although it suggests tightening leaning after factoring in slackening inflation and stable GDP growth,”
RSS