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Report: Broadcom hires a bank to help it sell its $2.2B RF chip business
Broadcom Inc. has hired Credit Suisse Group AG to help it sell one of its chip businesses, according to a new report, and insiders apparently believe that a potential deal could be worth as much as $10 billion.
The Wall Journal Street published details of the initiative this morning, attributing the information to multiple unnamed sources. Broadcom is said to be in the early stages of finding a buyer for its radio-frequency or RF chip business. The unit is one of the industry’s main suppliers of film bulk acoustic resonators, FBARs for short. They’re small devices used in mobile devices and cell towers to filter unwanted radio signals.
Broadcom’s earnings call last week revealed that the RF business generated revenues of $2.2 billion in the 12 months through Nov. 3. The Journal’s sources said the unit could be valued at $10 billion in a potential sale, but the report noted it “isn’t clear” if the described price is achievable.
One factor that may weigh on the value of the business is the growing competition in the radio filter market. A Qualcomm Inc. executive declared in February of 2018 that the company’s competing FBARs have achieved “parity” with Broadcom’s hardware, while other rivals such as publicly traded Qorvo Inc. are developing increasingly sophisticated designs as well.
The report about the possible sale of the RF unit comes against the backdrop of a recent change in strategy at Broadcom. The company launched a push into the software market last year that has seen it spend $29.7 billion to acquire CA Technologies Inc and, more recently, Symantec’s enterprise security business. A potential $10 billion cash haul from selling the RF unit could could boost Broadcom’s push to diversify its income streams beyond semiconductors.
Fellow chip giant Intel Corp. is currently pursuing a parallel effort to trim noncore units. The chipmaker offloaded its struggling mobile modem business to Apple Inc. in a $1 billion deal earlier this year ago and, according to a recent report, is now looking to sell its home connectivity unit as well. The unit makes chips for consumer networking devices that represent about $450 million in annual revenue for Intel.
Photo: Broadcom/Facebook
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