“Electronic chips: a forced process of diversification in this sector drives consolidation in an emerging market”

"Electronic chips: a forced process of diversification in this sector drives consolidation in an emerging market"

LSemiconductor factories – rather called “fab” – are not very reassuring, with clean rooms where men dressed in coveralls, also white, with masks and glasses, produce one of the most valuable resources in the world. Their value varies between 3 and 10 billion euros, depending on their size. We understand why the world’s top five in the sector, American Broadcom Inc., could announce the acquisition of VMware software and remote computers publisher VMware for $ 61 billion (57 billion euros) on Thursday, May 26, even in an environment where technology shares they collect tax on the stock market.

Read also Microprocessors: Donald Trump blocks merger between Broadcom and Qualcomm

If successful, the operation will be the largest in the year, following the announcement in January of Microsoft’s acquisition of Activision Blizzard for $ 67 billion. No wonder in the middle of Big Tech. Broadcom CEO Hock E. Tan has been known for his insatiable appetite since his company, Avago Technologies, took over the chip group in 2016. A year later, he tried to swallow rival Qualcomm, a $ 130 billion deal blocked by Donald Trump, who saw it as attack on United States security due to the installation of Avago headquarters in Singapore.

Since then, Broadcom has been headquartered in San Jose, California. And the acquisition of VMware, a former 40% owned division by Michael Dell, has no meaning as “Qualcomm’s operations.” It does not aim to make it a big rival of the American Intel or the Taiwanese TSMC in chips, but to diversify offers to companies (chips, software, virtualization, cloud, etc.) and, according to Mr. Tan, to make it “leader in technological infrastructure”.

Forced march

This is not its first diversification: in 2018, the group fell into the hands of CA Technologies for $ 19 billion; and in 2019, Symantec’s Computer Security Group’s enterprise security division for nearly $ 11 billion. The man watches the movement closely: Pat Gelsinger. He warned the former head of VMware and now CEO of Intel on the American channel CNBC “purely financial agreement”. Before adding: “Why not, when a dynamic cycle of innovation allows. » However, some industry analysts have found no such innovation in Broadcom’s diversification.

Forced transformation and a very capital-intensive dimension of activity chip manufacturers (chip makers) are pushing for consolidation in an emerging market. Everywhere (cars, smartphones, computers, consoles, industrial machines, etc.), “chips” generated sales of $ 556 billion in 2021 (+ 26% per year) and this amount should double in 2030, manufacturers calculate.

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