Broadcom Seeks Buyer for RF Wireless-Chip Unit -- Update
December 18 2019 - 2:01PM
Dow Jones News
By Cara Lombardo and Dana Cimilluca
Broadcom Inc. is looking to sell one of its wireless-chip units,
a move that would accelerate the company's shift away from its
roots as a semiconductor maker.
Broadcom is working with Credit Suisse Group AG to find a buyer
for its radio-frequency, or RF, unit, a segment of its
wireless-chip business that makes filters used in cellphones to
clarify signals, according to people familiar with the matter.
The unit had $2.2 billion in revenue in Broadcom's 2019 fiscal
year and is one of the original businesses of predecessor company
Avago. It could be worth $10 billion, some of the people said, but
it isn't clear if that's achievable and there may not be a deal.
The process is at an early stage, the people said.
Broadcom obliquely referred to the move when it reported results
last week, saying it was reclassifying its wireless units as
outside its core semiconductor business.
On a conference call to discuss results, Broadcom Chief
Executive Hock Tan called the wireless businesses "stand-alone
franchises" that don't fully mesh with the company's other
operations.
Broadcom, historically known for semiconductors that go into
cellphones and networking equipment, in recent years has pushed
into the more lucrative software business through two big
acquisitions. It paid $18.9 billion for CA Technologies Inc. in
2018 and recently closed a deal to buy Symantec Corp.'s corporate
business for $10.7 billion. The push into software came after the
company was thwarted in an effort to buy Qualcomm Inc. for more
than $100 billion.
Other units in the wireless business include two that also
supply smartphone makers -- mainly Apple Inc., which accounted for
roughly 25% of Broadcom's net revenue in the 2018 fiscal year. One
makes combo chips that enable Wi-Fi, Bluetooth and GPS and brought
in $2.2 billion in revenue in fiscal 2019. Another makes custom
mixed-signal products that enable touch-screen technology and
wireless charging and had $1.1 billion in revenue, though Mr. Tan
noted that figure is expected to drop to $500 million in fiscal
year 2020. There is also a smaller segment classified as noncore
that is focused on industrial products.
The RF unit is a market leader in so-called FBARs -- film bulk
acoustic resonators -- that are used in cellphones and base
stations to filter out unwanted radio transmissions. But in recent
years it has faced increased competition. One rival, Qorvo Inc.,
has developed an alternative filtering technology that's tiny,
reliable and can replace traditional FBARs.
New radio-frequency chips are considered crucial to getting the
best possible performance out of the latest phones for 5G -- a new
technology standard that's expected to revolutionize wireless
communications. Qorvo and other rivals including Qualcomm and
Skyworks Solutions Inc. have won spots in new 5G phones from
Samsung Electronics Co., Huawei Technologies Co. and LG Electronics
Inc.
--Asa Fitch contributed to this article.
Write to Cara Lombardo at cara.lombardo@wsj.com and Dana
Cimilluca at dana.cimilluca@wsj.com
(END) Dow Jones Newswires
December 18, 2019 13:46 ET (18:46 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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