Silicon is what makes our devices work the way they were intended, behind all of the shiny glass and chamfered edges there are chips from designers and manufacturers all over the world. While Qualcomm, Samsung and NVIDIA might be names many will know, there are more than just these names working behind the scenes to make sure our devices behave as expected. One such name is Broadcom, a Singapore-based firm, that specializes in network technologies and integrated circuits that help smartphones, laptops and more connect to other devices over Bluetooth, NFC and of course, WiFi. Last year, the firm was purchased by Avago Technologies for a sizable sum of $37 Billion, and now, Broadcom themselves is looking to purchase Brocade for $5.5 Billion.
Brocade is a firm that specializes in the more Desktop-orientated world of network technologies, and has become known for their work on fiber channel switches, which is the technology that appeals to Broadcom the most in this deal. Broadcom has offered Brocade $12.75 a share, and will purchase the company for $5.5 Billion, while agreeing to take $400 Million of debt from Brocade as well. According to CFRA Research, Angelo Zino, the deal is "highly complementary to Broadcom's existing enterprise storage offerings and boosts its exposure to the high-growth data center market". Broadcom, much like companies like ARM Holdings, is a firm that sells chip designs and chips to customers to use in their products and to avoid competing with big customers like Cisco, Broadcom will be offloading Brocade's networking business in a new sale once this deal is completed.
This deal is yet another in an ever-growing line of deals that sees the chip sector continue to consolidate. Last week we saw Qualcomm agree to buy NXP in a massive $47 Billion deal, and ARM Holdings is to be purchased by Japan's SoftBank, too. With rising competition from Chinese names such as MediaTek, it's no surprise that these companies are trying to consolidate and group their assets together. Of course, there will come a point when there are no more companies left to group together, but given the size of the semiconductor industry, it's unlikely we reach that point for a long time yet.