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Avago to buy Broadcom for $37B in biggest-ever chip deal
- deleted 11y ago[deleted]
- jsingleton 11y agoI wonder how this will affect the Raspberry Pi foundation. They use Broadcom SoCs and seem to have a pretty good relationship with them.
- vvanders 11y agoYeah, that's because the founder works for BC. I had the exact same though, I guess time will tell.
- astrodust 11y agoThe good news is they're not stuck with a single vendor, they could theoretically go to any company with an ARM license and get a compatible chip. If they were feeling ambitious they could even get their own chip made by someone like TSMC or Samsung.
- alexandros 11y agoIt's not that simple. Research the story of the ODROID-W and their quest to make an rpi-compatible SBC.
- astrodust 11y agoThat's for an external party. Wouldn't the Pi foundation have a better idea of how to do it?
- fragmede 11y agoCan you be more specific? All I'm finding is they made the ODROID-W using a specific Broadcom SoC, and Broadcom refused to supply them with it, so Hardkernel had to stop making the ODROID-W after their first production run. That seems to say that theres not a technical issue with making an rpi-compatible SBC but a political one.
- voltagex_ 11y agoThe best I can find is https://www.raspberrypi.org/forums/viewtopic.php?f=62&t=85645&p=604884&hilit=odroid https://www.raspberrypi.org/forums/viewtopic.php?f=62&t=8564..., which is pretty funny but not very informative.
- aselzer 11y agoBut ARM != compatible with the Raspberry Pi. The GPIOs, GPU, booting process, etc. is all specific to it, and I guess manufacturing a compatible processor would need complicated if not almost impossible reverse engineering and might violate Broadcom's copyright or some contracts. And a lot of commercial products, programs and libraries depend on the Raspberry Pi, so they have to be able to continue making compatible products.
- neurotech1 11y agoI wonder how much IP in the BCM2835 and BCM2836 SoC actually belongs to Broadcom vs 3rd parties? My understanding is that the BCM2835/BCM2836 production run was dedicated to RasPi, although originally designed for OEM cellphone manufactures. The figure I heard was that an outsourced SoC costs around $10-20m in licensing and NRE. That is basically go to a company that already has produced SoCs (eg. Samsung) and write a check. Considering that RasPi has sold over 5m units, getting another custom Soc made is not out of reach.
- userbinator 11y agoI'm a bit more optimistic about Avago releasing more info on their SoCs. It's not quite the same thing, but I've obtained datasheets for their optical mouse sensors rather easily - possibly because of their Agilent/HP heritage. Trying to get anything from Broadcom is worse than "pulling teeth from a chook" - I've had better success with small Chinese companies like AllWinner.
- phaemon 11y agoDoes anyone know what Avago's attitude towards Open Source is? Any chance we might get some decent drivers for Broadcom gear?
- rpcope1 11y agoGiven past experience with both Avago and Broadcom, I don't think I would hold your hopes too high; I would bet money that the current attitude you get from Broadcom about drivers will continue if not get worse. Most vendors in the hardware sphere tend to be rather protective of everything they do (fairly or unfairly), and pretty old school,and that sort of attitude doesn't really play well with our open source/libre desires for more transparency in things like drives.
- tptacek 11y agoTIL (I think?): Avago is the spun-off semiconductor division of Agilent, plus LSI and Emulex (minus, it seems, all the parts of those businesses that don't produce chipset products). I think? this makes Avago the largest chipset vendor.
- rayiner 11y agoTIL too. My response was: "what the heck is an Avago and how is it big enough to buy Broadcom?!" I don't really get the trend of taking well-established brands and changing their name to something nobody recognizes. This gets me all the time with Leidos too (i.e. SAIC).
- tptacek 11y agoWell, to be fair, that's not really what happened. HP spun off Agilent to focus on end-user general IT products. Agilent was a giant hairball of a company. PE firms stripped the chipset and component divisions out of the hairball, called them "Avago", refined the business down to chipsets and away from general components, and executed a roll-up strategy on the chipset space. What would make sense would be for Avago to do a VW/Audi or Cingular/ATT thing and assume Broadcom's branding. I'm not sure that the "Agilent" branding does a whole lot more for a chipset business than "Avago" does. Also: I'm guessing if you're an Avago customer, you know it. :) Similarly: Leidos isn't really SAIC, but rather the spun-off "national security" IT products part of SAIC.
- tcas 11y agoIt would be interesting to try and make a graph of the product lines / companies in this space. I.e. HP started off doing test equipment, and back in the 90s spun that division and everything not related to computers/storage/printers to Agilent. Agilent has since spun off: * Phillips Medical Systems: health care * Avago: Semiconductors * Verigy: Semiconductor test * Keysight: Test equipment + Probably more I don't know about due to acquisitions.
- 11y ago
- rpcope1 11y agoJust from my own experience, when LSI was bought up by Avago, a lot of the LSI guys around here complained that it was a rather rough transition. Avago seems to like buying up companies like this and piecing them out, like how a lot of LSI's storage controller related assets were sliced off and sold to Seagate after being acquired by Avago; I'm not sure if this is a good thing for Broadcom.
- sliverstorm 11y agoThey also slashed a bunch of redundant divisions, I am told. I forget which teams, but for example "We already have a library team, we don't need another one, but we could really use this serdes group..."
- test001only 11y agoFrom the reviews in Glassdoor, it looks like the employees are not treated well in Avago and Avago's CEO has a very low approval rating. So this not a good thing for employees of Broadcom also.
- MCRed 11y agoCompanies tend to accumulate multiple product lines. It seems Avago's strategy is to buy companies with high growth products, then sell off the less high growth product lines to others (which probably helps finance the acquisition to some extent). Put another way, he's exploiting management's tendency to not focus on high growth products, by not selling off the profitable, but slower growing products themselves. The result of this is that the high growth is diluted over a broader base revenue made up of slower growth companies... which lowers the companies value to investors (PEG is a common measure of the value of a company, which is combination of price, earnings and growth, so growth increases the multiple.) If there were no friction this would be good, because the slower growing products will be merged with other companies who probably have the same product line, and then they can be combined to produce another generation that has the best of both previous companies products. Alas, there is always friction in human things and thus this strategy has risk for all involved,
- sitkack 11y ago
- hajile 11y agoI wonder if the US government will be okay with such a large chipmaker to be owned by a Singapore company. Historically, they haven't been too keen on exporting chip tech. If Qualcomm is on the table, it seems more likely to be approved.
- adventured 11y agoThey'll have absolutely no problem with it. Avago is an American company masquerading as a Singapore company. It's controlled by US money, and it also has a joint HQ in San Jose. 1) "The company was founded in 1961 as a semiconductor products division of HP. The division separated as Agilent Technologies in 1999" 2) "KKR and Silver Lake Partners acquired the division of Agilent Technologies in 2005 for $2.6 billion and formed Avago Technologies" 3) Major shareholders: JP Morgan, FMR, Blackrock, Capital Group, Vanguard, etc. - it's almost entirely controlled by US money interests.
- mud_dauber 11y agoConcur completely.
- dba7dba 11y agoI disagree they will have no problem with it. Maybe NSA but not Senators. This deal is basically a form of tax inversion. Or is Avago paying all US tax because of the joint HQ in San Jose?
- adventured 11y agoI agree that some Congress members might want to be annoyed by this, but nothing will come of it. It's not a tax inversion in legal terms at all, it's a straight acquisition (there are important distinctions there). Avago was smart to pay a lot of cash as well, to push Broadcom shareholder's ownership position down to about 1/3 (keeping it far away from the tax inversion lines). Here's why: "Thursday’s deal isn’t impacted by the Treasury [inversion] guidelines, says Willens, because Broadcom shareholders will own less than 60% of the stock of the acquiring corporation. It’s also not by definition an inversion since Avago is the acquirer, but the result the same. “Here all of the “normal” benefits of an inversion should be freely available,” Willens concludes." http://www.forbes.com/sites/antoinegara/2015/05/28/could-avago-become-the-valeant-pharmaceuticals-of-the-semiconductor-sector/ http://www.forbes.com/sites/antoinegara/2015/05/28/could-ava...
- trsohmers 11y agoThe number of large semiconductor acquisitions in the past year has been pretty insane... just further consolidation with very few new semi startups coming out.
- rpcope1 11y agoIt's far easier to build a start-up doing software than pretty much any hardware, so current giants have a huge advantage over anyone trying to break in. Consider for a moment that a new fab with a recent process is probably a many billion dollar investment, and that even fabless semiconductor companies (a la LSI, recently) there are huge amounts of IP, capital, and brain power tied up; everything also really needs to be really correct up front, and tooling is expensive (you wouldn't want to waste millions of dollars building a chip that's really unproven and undesired from a market perspective). Even technologies with less expensive (though not at all cheap) tooling, like hard disk drives, the IP is so tied up with the current giants (WD/HGST/Seagate), and the firmware needed to make the drives work at current capacities is so complex, that it is essentially impossible to break into the market.
- zokier 11y agoOn the other hand the company in question here (Broadcom) was started by essentially two guys in a garage in early to mid-nineties.
- geomark 11y agoThat's the popular legend. But in reality one guy was a professor at UCLA and the other a well paid engineer at TRW. To get started with early development of much of their IP they used considerable resources available to them at their employers, which included funding from government IR&D projects and chip design engineers who were on TRW's payroll. So hardly a garage startup.
- zokier 11y agoWhy would TRW have given away such resources and IP to what would become Broadcom?
- dopeboy 11y agoUsed to intern for them in the summer of 2008. Always felt the good times had passed (early 2000s) with Qualcomm as their arch nemesis.
- Nelson69 11y agoAt Broadcom? I'd echo that, the late 1990s and early 2000s were definitely when they were undergoing radical growth. They tended to pay lower wages but everyone was okay with it because they were making tons on the stock. I never worked for them but worked closely with them. They had an intensity about them... It seems like they've lost a bit of their mojo, everyone, it seems, builds custom ARM chips now... Back in those days they could pretty easily target a vertical, graft a few chips together and sell a specialized solution that was pretty compelling.
- deleted 11y ago[deleted]
- dmritard96 11y agojust started dealing with avago a few weeks ago, before that had never heard of them. seems like they do a lot of buy and splits to get the really profitable/strategic pieces and sell of the remainders
- chx 11y agoWell, that is interesting. I wonder how much R&D will continue and in particular what happens to Gottfried Ungerboeck (inventor of trellis modulation). This will be interesting to watch.
- randomname2 11y agoThe reason for the deal: as the WSJ noted yesterday, "growth has been hard to come by for Broadcom, a 24-year-old company that makes communications chips for tablets and smartphones, and supplies the Internet links for cable-television and telecommunications devices." As to why Avago is likewise excited to close the deal, "Avago has been likened to health-care companies such as Valeant Pharmaceuticals International Inc. that are based in foreign tax jurisdictions and also have become voracious acquirers." So Broadcom is merely the latest "notch on the bedpost", funded with billions in new debt. The press release also mentions $750 million "synergies" in the next 18 months which should translate to about 2000-3000 layoffs.
- limeyx 11y ago"no no no, you're not being laid off oh heavens no, you're being 'synergied" now give me your key fob and get out" ...
- tw04 11y agoThey don't have to lay ANYONE off. That's the beauty. They just conveniently avoid paying any US taxes on a "shitload" (technical term) of income, because they aren't a US company - and Broadcom has avoided repatriating income for precisely this reason.
- ausjke 11y agoFirst Motorola, Freescale, now Broadcom, who will be the next? Marvell? or AMD? The latter is really cheap though. World is changing so fast these days. Will USA be left with companies like Facebook/Twitter and we will all end up doing social-activities using devices invented/made elsewhere and feel great about them?
- Swannie 11y agoThey note the mobile chips - but those are sold cheap. More importantly is the fact that Broadcom's switch chips have pretty much become the de-facto chipsets used in data center switches from most vendors. They are quickly becoming the Intel of DC switches. And these chips, are not so cheap (though true, there are fewer of them, but the margins are much more attractive).
- jasonmp85 11y agoIANAAnalyst, but the company with probably the most components in devices in the entire world is being sold for about 1.6x what WhatsApp went for? Crazy times.
- tw04 11y agoFunny money in both cases. Facebook is more than happy to give "value * x" in stock - because at the end of the day, stock is monopoly money.
- tw04 11y agoThis summarizes the deal: >As of 2014, Broadcom had $3.13 billion of cash and cash equivalents held by its foreign subsidiaries, and it deferred about $4.85 billion in tax on un-repatriated foreign earnings, according to SEC filings. Selling to a Singapore-based firm will free the foreign cash and help eliminate potential U.S. tax liabilities. F. You. The deal is predicated on avoiding paying US taxes. "I know we built our business on the luxury of a developed western nation that provided ample education for our founders, but we'd like to avoid actually paying for that luxury now, because we no longer benefit from it." I hope the USJD bends them over a barrel on the taxation before this is allowed to close. But who am I kidding, green light baby! Let it burn!
- immad 11y agoIt is extremely disappointing that this is the top comment on Hacker News.
- CountSessine 11y agoWhy? Is tax evasion not relevant?
- geomark 11y agoTax avoidance, perfectly legal and one of the duties of company management. Tax evasion is illegal. This isn't it.
- e12e 11y agoIt may be legal, but it can still be considered anti-social and short-sighted.
- geomark 11y agoIt's not just legal, it is a fiduciary responsibility of the management of a publicly traded company to minimize its tax burden. To not do so is negligent. If they feel that they can maximize shareholder value by headquartering in a high tax location then they do so. Part of that may include fostering an image of social responsibility and vision. On the other hand, if they feel that the company should pay more taxes than required just because, then instead of negligently continuing to operate in an unfavorable tax environment they should bring it before the shareholders and if they support it set up a foundation or charity to do so. Make it explicit that they are paying more than required to the US government because 'merica.
- desdiv 11y agoiANAL, but isn't this another case of tax inversion[0]? Singapore does not tax profits generated outside of its borders (unless repatriated). [0] https://en.wikipedia.org/wiki/Tax_inversion https://en.wikipedia.org/wiki/Tax_inversion
- chdir 11y agoThe story of Henry Nicholas, Broadcom's co-founder : http://www.vanityfair.com/news/2008/11/nicholas200811 http://www.vanityfair.com/news/2008/11/nicholas200811