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9 January 2020

Broadcom sells Symantec, its RF division could follow for $10bn

Broadcom is rarely out of the M&A headlines, and the main news is that one of its oddest acquisitions, of enterprise security firm Symantec, is to be sold on to Accenture, just five months after the deal was finalized. The price was not disclosed, but is thought to be less than the $10.7bn it paid – which may make a less high profile divestment, of its RF unit, a bigger windfall. The price of that operation could be as high as $10bn, reported The Wall Street Journal.

During Broadcom’s full year earnings call at the end of last year, CEO Hock Tan said that its wireless and industrial businesses were “standalone” and no longer “core”. Since the failure of the company’s bid to acquire Qualcomm for $117bn (blocked by the intervention of President Trump), it has steadily backed away from wireless, and even from some other formerly central communications chip activities, and has been building up software assets with purchases like the shortlived Symantec deal, and the even odder deal to buy CA Technologies.

It has already offloaded its modem unit, which it acquired from Renesas and retained for almost as short a time as Symantec. The RF business produces several smartphone components including power amplifiers, FBAR (film bulk acoustic resonator) filters and duplexers. It generated revenues of $2.2bn in the fiscal year to November 3 and is expected to grow its revenues by 7% to 9% year-on-year in 2020 because 5G devices will require more, or higher value, RF components.

Broadcom has two other wireless businesses. One is a venerable member of its stable, focused on WiFi and Bluetooth chips, and perhaps less likely to be offloaded since the firm still has considerable market share in WiFi. The other produces mixed signal custom products that are sold mostly to one large smartphone vendor (believed to be Apple).

Possible bidders for the RF division could include Apple too, given its policy of bringing key components inhouse (though that has apparently suffered a blow when it comes to graphics – see separate item). Other radio chip vendors would also be obvious candidates, including MediaTek, Samsung, Skyworks or Murata.