The History of Broadcom: Blazing the Trail of Tech Innovation

As a global infrastructure technology leader, Broadcom’s core technologies are all around us, whether we know it or not.

This is largely thanks to the many strategic acquisitions throughout Broadcom’s history that helped the company continuously develop its product portfolio and engineering depth.

Its 2023 VMWare acquisition has already been dubbed a historic deal as one of the biggest tech acquisitions ever made.

In this article, our experts at Business2Community deep dive Broadcom’s history, explaining how it started out, when it changed its name, and how its acquisitions helped it become a key player in the semiconductor and infrastructure software industries.

Key Highlights: Broadcom’s History and Acquisitions

1. Strategic Acquisitions: Broadcom’s growth is largely driven by strategic acquisitions, including Avago Technologies and VMware.
2. Product Portfolio: Broadcom’s acquisitions have diversified its offerings, spanning semiconductors, infrastructure software, and cybersecurity solutions.
3. Market Leadership: The company is a global leader in semiconductor solutions, with technologies present in numerous everyday devices.
4. Financial Growth: Broadcom has shown consistent revenue and profit growth, bolstered by its strategic acquisitions and market presence.
5. Future Prospects: Broadcom’s continued focus on AI and infrastructure software positions it well for future growth in these sectors.

6 Fun Facts About Broadcom

1. From Garage to Global: Broadcom’s journey began in a garage in Los Angeles, where co-founders Henry Samueli and Henry Nicholas started the company. This humble beginning is reminiscent of other tech giants like Apple and HP.
2. Incredible IPO: When Broadcom went public in 1998, its IPO was priced at $24 per share, but the demand was so high that shares soared, and the company raised $78.1 million. This successful IPO made Samueli and Nicholas multimillionaires overnight.
3. Acquisition Giant: Broadcom is known for its strategic acquisitions, having acquired over 20 companies since its inception. Some notable acquisitions include the purchase of Brocade Communications for $5.9 billion and CA Technologies for $18.9 billion, and the historic acquisition of VMware for $69 billion in 2023.
4. Leading AI Innovator: Broadcom is a major player in the AI chip market, second only to NVIDIA. Their AI chips are essential in powering the next generation of artificial intelligence applications, including those in autonomous vehicles and advanced computing.
5. Revenue from Everyday Devices: Broadcom’s semiconductor solutions are used in a wide array of everyday devices. From smartphones to Wi-Fi routers, it’s likely that any internet traffic you use crosses a Broadcom chip, as their technology is embedded in nearly all internet communications.
6. Cultural Icon: Broadcom’s success story has made it a cultural icon in the tech industry. The company’s journey from a small startup to a global tech leader has been featured in numerous business case studies and is often highlighted as a model of innovation and strategic growth.

Who Owns Broadcom?

Broadcom Corporation is a wholly-owned subsidiary of Broadcom Inc. It was acquired by Avago Technologies in 2016. After the acquisition, Avago Technologies took the name Broadcom Inc. but continued using its ticker symbol AVGO on Nasdaq. The largest shareholders of Broadcom (AVGO) are Vanguard Group (over 8%), Blackrock Inc. (over 6.5%), and Capital World Investors (over 6%).

Broadcom Corporation’s story began in 1991 when it was founded by two colleagues, Henry Samueli and Henry Nicholas. Samueli was a professor at UCLA, researching semiconductor chips for broadband communications. Nicholas was one of his PhD students. Their company focused on wireless and broadband communication semiconductors.

Only four years after they founded Broadcom, the co-founders decided to move the company from Los Angeles to Irvine, California. Their start-up was growing fast, and they needed to recruit top talent, which was much easier to do in a tech hub like Irvine.

In 1998, Broadcom had its initial public offering (IPO). Although it estimated the shares would sell for between $10 and $12 each, the IPO was priced at $24 per share. With this deal, Samueli and Nicholas became multi-millionaires, as they held 28% of the company’s stocks each, worth $536.8 million combined.

Overall, the tech company raised $78.1 million in the IPO. A market leader in networking equipment, Cisco also bought 500,000 Broadcom shares at the offering price.

Who is the Broadcom CEO?

Hock E. Tan has been the CEO of Broadcom since 2016. As the president and CEO of Avago Technologies, he took over as the CEO of the combined company when Avago Technologies acquired Broadcom.

Before the acquisition, Broadcom co-founder Henry Nicholas had served as CEO between 1991 and 2003. The other co-founder, Henry Samueli, worked as Chief Technical Officer from 1991 to 2008, and from 2009 to 2016. He has been Broadcom’s Chairman of the Board since 2018.

After Henry Nicholas stepped back in 2003, Alan Ross briefly took over as CEO. In 2004, Scott A. McGregor, former CEO of Philips Semiconductors, became the company’s next CEO until the acquisition.

Where is Broadcom HQ?

Broadcom headquarters are in Palo Alto, California. When Singapore-based Avago Technologies bought Broadcom Corporation in 2016, the company re-incorporated in Singapore. A year later, Broadcom announced its proposal to acquire Qualcomm, one of the major American wireless technology companies. Then-president Donald Trump blocked the acquisition for national security reasons.

In 2018, Broadcom moved its headquarters to San Jose, California, and incorporated in Delaware. “The completion of our re-domiciliation to the United States marks an important milestone in our company’s history as Broadcom has been an American company in every respect other than our legal domicile,” said CEO Hock Tan.

Finally, after acquiring VMWare in 2023, Broadcom moved its headquarters from San Jose to Palo Alto, where the VMWare headquarters were located.

Growth and Development of Broadcom

Broadcom is one of the top 10 tech companies worldwide, with a market cap of over $590 billion as of February 2024. It outranks companies like Samsung, Adobe, and Netflix.

The company’s technologies are present in many everyday devices, including mobile phones, laptops, wireless routers, cars, and more. According to Broadcom executives, 99% of all internet traffic crosses at least one Broadcom chip.

To get to this point, the company made a string of strategic acquisitions and savvy business moves.

1960s: Heritage of Broadcom Inc.

Broadcom Inc. considers its roots to be based on a rich technical heritage extending back to the 60s. The company’s journey started in 1961 in the semiconductor division of Hewlett-Packard (HP). The division then spun off as Agilent Technologies in 1995 and as Avago Technologies in 2005.

Between the 60s and 90s, researchers made quite a few crucial discoveries that would lay the foundations of Broadcom’s current business.

Examples include: the founding of the first laser (1960), the first commercially available LED (1966), the mechanism enabling tower-to-tower cellular calls (1970), and FBAR technology for wireless communication in mobile devices (1990).

1991-2000: Early Years of Broadcom Corporation

In the late 80s and early 90s, broadband didn’t exist.

People used voice band modems to access the internet at home. Operating at 50 kB per second, the speed of the internet was not ideal, and there was a demand for faster internet.

This was one of the reasons why Henry Samueli and Henry Nicholas founded Broadcom Corporation in 1991 – you can see him recount this in the earlier video on this page.

The tech start-up had a profitable start. By 1995, it needed top engineering talent, which was difficult to hire in Los Angeles.

As a result, Broadcom moved its headquarters to Irvine, California.

Three years later, it had its IPO, making an impressive start on Wall Street as internet stocks became more and more popular. At the time, Broadcom had created the first single-chip DOCSIS modem to connect cable TVs to the internet.

Also in the 90s, Broadcom introduced an optical mouse sensor to help make the computer mouse last longer without needing mousepads.

2000-2005: Avago Technologies Spins Off of Agilent Technologies

Broadcom developed the first 10-Gbps CMOS transceiver in 2002. The same year, it shipped the 100 millionth optical mouse sensor.

In 2005, Avago Technologies was established, becoming the world’s largest privately held independent semiconductor company. Before spinning off, Avago Technologies was a part of HP’s and Agilent Technologies’ semiconductor divisions.

The new company announced it would domicile in Singapore. Hock Tan, who is the current CEO of Broadcom Inc., started as Avago’s CEO in 2006.

2005-2010: Broadcom Gets Involved in the Stock Options Backdating Scandal

In 2008, the Securities and Exchange Commission (SEC) accused Broadcom Corporation of falsifying its income by backdating stock options between 1998 and 2003. This meant that Broadcom restated its financial results in January 2007 and reported $2 billion in additional compensation expenses. Known as the stock options backdating scandal, the SEC identified over 100 companies along with Broadcom for stock options irregularities, including Monster Worldwide, Inc., Apple, and United Health Group.

Four Broadcom officers were charged, including former CEO Henry Nicholas, CTO Henry Samueli, CFO William Ruehle, and general counsel David Dull.

Based on the court rulings between 2008 and 2010, the SEC announced it would not proceed further against Broadcom in 2010. To settle the suit, Broadcom said it would pay $160.5 million.

During the same period, the US International Trade Commission banned the import of high-speed wireless phones using Qualcomm chips, as they were found to infringe on Broadcom chips. To end the patent dispute, Qualcomm agreed to pay $891 million in cash over four years.

On the product front, Broadcom developed the first mobile phone chip to combine Wi-Fi, Bluetooth, and FM in 2007. Then, in 2010, it created the world’s first Terabit Ethernet switch chip, a new generation of ultra-high bandwidth network connections.

2010-2016: Broadcom Corp Becomes a Part of Broadcom Inc

In 2016, Avago Technologies acquired Broadcom for $37 billion in cash and stock. Recognizing the strong brand Broadcom built over the years, CEO Hock Tan decided to keep the name Broadcom.

At the time of the acquisition, Avago was known for its semiconductor solutions for four key markets: wireless communications, enterprise storage, wired infrastructure, and industrial. Broadcom Corp. was focusing on wired and wireless communications, used widely in Apple and Samsung smartphones. Both technologies complemented each other well, and together, they formed the third-largest US semiconductor maker by revenue.

2016-2018: Broadcom Fails to Acquire Qualcomm

In 2017, Broadcom made an offer to acquire Qualcomm for $70.00 per share in cash and stock.

The proposal was 28% over Qualcomm’s closing price on November 2, 2017.

According to Broadcom, this deal would have helped both companies deliver more advanced semiconductor solutions, as Qualcomm’s cellular business complemented Broadcom’s product portfolio.

However, then-president Donald Trump blocked the deal in 2018, pointing out national security concerns.

“There is credible evidence that leads me to believe that Broadcom Limited, a limited company organized under the laws of Singapore (Broadcom)…through exercising control of Qualcomm Incorporated (Qualcomm), a Delaware corporation, might take action that threatens to impair the national security of the United States,” he said in a statement issued by the White House.

Broadcom withdrew the offer in March 2018, saying it would comply with the Order. The same year, it moved its headquarters back to the US, becoming a San Jose-based company incorporated in Delaware.

2018-2020: Anticompetitive Practices and Patent Suits

In October 2019, the European Commission ordered Broadcom to stop its anticompetitive practices. It was forcing small hardware companies to sign deals with strict exclusivity clauses for devices like cable boxes to stomp out competition.

Executive Vice-President of the European Commission, Margrethe Vestager, said that these anticompetitive practices could harm the competition in the market.

.@Broadcom is world leading in chipsets used for TV set-top boxes & modems. We have strong indications that it is engaging in anticompetitive practices. This is likely to create serious & irreparable harm to competition. We have ordered @Broadcom to immediately stop its conduct.

— Margrethe Vestager (@vestager) October 16, 2019

In addition to the EU, The Federal Trade Commission had also announced it would investigate Broadcom’s anticompetitive practices in 2018. Broadcom settled both complaints by suspending exclusivity or quasi-exclusivity arrangements with its customers.

Since 2018, Broadcom has been involved in patent disputes with Netflix.

According to Broadcom, Netflix allegedly infringed a Broadcom video coding patent in its video streaming services. In 2023, the German court fined Netflix €7.05 million, in addition to a fine of up to €250,000 for each act of infringement.

2020-Present: Broadcom as a Global Infrastructure Technology Leader

In 2022, Broadcom announced the world’s first WiFi 7 solutions, stating that it would be the future of wireless.

WiFi 7 is so fast that it can power AR and VR experiences, multi-gigabit broadband, and immersive gaming. The company also launched industry-firsts related to artificial intelligence, introducing the highest-performance fabric for AI networks Jericho3-AI.

Throughout the years, Broadcom’s products and solutions have been used in various industries, including telecommunications, data center networking, enterprise, cloud, storage, and automotive.

Here are some examples:

• Networking: Highest bandwidth switch chip in the industry serving AI and ML markets
• Broadband: Multi-gigabit broadband modems for faster internet at home
• Wireless: Charging ASIC solutions for more efficient mobile and wearable devices
• Industrial: Navigation systems of EVs, robotics, and drones
• Ethernet connectivity, switching, and PHYs: Ethernet switching, network adapters, Smart NICs, and optical PHY ICs for enterprise, cloud, and data center environments
• Cybersecurity: Ecommerce authentication network for payment security
• Wireless connectivity: Optimizing wireless experiences for smartphones, wearables, automobiles, and connected devices
• Wired connectivity: Custom silicon solutions for cable, DSL, and PON
• Industry solutions: Providing IT infrastructure help to critical industries, including government partners and agencies

Broadcom’s Acquisition History

Over the years, Broadcom Inc. has made many strategic acquisitions diversifying its portfolio, expanding into new branches of tech, and continuing to deliver category-leading semiconductor solutions.

Here are the reasons behind its key acquisitions that helped the chip-maker become one of the biggest companies in the world:

• ServerWorks Corporation (2001): The ServerWorks Corporation acquisition was key for Broadcom’s networking chip-making business.
• RedSwitch Inc (2002): By acquiring RedSwitch Inc, Broadcom added InfiniBand and RapidIO to its product portfolio.
• Fiber Business from Infineon Technologies AG (2007): A leader in automotive multimedia infotainment networks, Infineon’s fiber business was a well-thought-out addition to fiber optic products.
• Nemicon Rotary Encoders Corp (2008): Broadcom aimed to improve its motion control product line with the Nemicon Rotary Encoders acquisition.
• Bulk Acoustic Wave (BAW) (2008): Another technology hardware acquisition, Bulk Acoustic Wave, helped diversify Broadcom’s portfolio in the tech hardware sector.
• Javelin Semiconductor Inc. (2013): By acquiring Javelin Semiconductor Inc., Broadcom announced it would work on the next-generation hybrid GaAs/CMOS front-end modules technology and strengthen its position in the high-performance RF components for the smartphone market.
• CyOptics Inc. (2013): CyOptics is a leader in Indium Phosphide (InP) optical chips, adding to Broadcom’s fiber optics product portfolio for enterprise and data center applications.
• LSI Corp (2014): A leader in the enterprise storage market, the LSI Corp acquisition helped Broadcom save money and expand its offerings for wired infrastructure solutions.
• PLX Technology Inc. (2014): PLX’s products complement Broadcom’s connectivity and networking equipment.
• Emulex Corp. (2015): Another acquisition with the enterprise storage market in mind, Emulex Corp’s products would help Broadcom achieve more in-depth connectivity solutions.
• Avago Technologies acquired Broadcom (2016): Broadcom Corp. and Broadcom Limited were formed after Avago Technologies acquired the company. Avago Technologies then changed its name to Broadcom Inc., making both Broadcom Corp. and Broadcom Limited subsidiaries of Broadcom Inc.
• Brocade Communications Systems, Inc. (2017): Specializing in enterprise storage, Brocade contributed to Broadcom’s position as a market leader.
• CA Technologies, Inc. (2018): Broadcom bought CA Technologies for $18.9 billion, as it wanted to strengthen its presence in the software business.
• Symantec Enterprise Security Business (2019): Broadcom purchased Symantec’s enterprise security business, getting one step closer to building a leading company in infrastructure technology.
• VMware, Inc. (2023): Broadcom’s VMware acquisition was one of the biggest deals in tech history, enhancing Broadcom’s position in infrastructure software solutions.

The Broadcom VMware Acquisition

Broadcom completed the acquisition of VMware in 2023, paying $61 billion in cash and stock, and taking on $8 billion of VMware’s debt. Accounting for a total of $69 billion, this was one of the biggest tech acquisitions in history. On 23rd November 2023, Broadcom announced that the acquisition was finalized, about a month after Microsoft completed its historic Activation Blizzard acquisition, also for $69 billion.

Broadcom’s initial proposal to acquire VMWare came in 2022 when the company offered $61 billion in cash and stock. According to Broadcom, this would bring together two innovative companies with engineering excellence. It took over a year for Broadcom to finalize the VMWare acquisition as it had to obtain legal merger clearance in Australia, Brazil, Canada, China, the European Union, Israel, Japan, South Africa, South Korea, Taiwan, and the United Kingdom.

VMware had a market cap of $52.22 billion in 2022 before the acquisition. One of the cloud industry’s leading companies, VMware develops virtualization machines (VMs). With its multi-cloud technology, users can run different operating systems on a single host. Broadcom CEO Hock Tan defined VMWare as “One of those few technology companies that can really claim to be part of the cloud,” recognizing the acquisition was an important milestone for Broadcom.

After the acquisition, VMware announced it would end perpetual licensing and switch to a subscription-based model. Existing customers would be able to use their existing perpetual licenses but would no longer have access to service and support. On its Q4 2023 Earnings Call, Broadcom also said VMware would focus on “enabling global enterprises to run their applications across their data centers”.

Broadcom Earnings

In 2023, Broadcom’s stock increased by nearly 107%. As of February 2024, it has had a 52-week high of $1,284.55 and a 52-week low of $572.10, showing a considerable difference. CFO Kirsten Spears said the VMware acquisition was transformational and predicted an increase in the company’s cash flows.

Broadcom pays a quarterly per-share dividend for the full year with a dividend yield of 1.66%. In 2023, it returned $13.5 billion in cash to its shareholders through dividends and stock buybacks.

Given the successful VMware acquisition and the anticipated increase in cash flows, Broadcom increased its quarterly common stock dividend by 14% in 2023. This would be the company’s thirteenth consecutive increase in annual dividends since 2011.

Here is how much it paid at the end of the last quarter of the year between 2013 and 2023:

Back when it was still called Avago Technologies, the company went through an IPO in 2009, offering 43,200,000 shares at $15.00. It raised $648 million, becoming the second-largest IPO in the US that year.

In 2023, Broadcom Inc. generated a revenue of $35.8 billion.

Its semiconductor segment grew at an 18% CAGR between 2020 and 2023, playing a big role in its revenue increase.

Of the $35.8 billion generated, $28.18 billion was due to semiconductor solutions, and $7.39 billion from infrastructure software. Both its operating profit and free cash flow grew, 9% year on year and 8% year on year, respectively.

Generative AI represented 15% of Broadcom’s semiconductor revenue in 2023, thanks to its Ethernet solutions and AI accelerators. Moving forward, the company expected gen AI to reach 25% of the semiconductor revenue, taking a more central role.

The Future of Broadcom

Broadcom is the second-largest AI chip maker, ranking behind NVIDIA, led by Jensen Huang. The AI chip-making industry generated $44.2 billion in 2022. Analysts expect the industry’s revenue to reach nearly $120 billion in revenue by 2027.

Up until 2023, semiconductors have been Broadcom’s largest revenue segment. In the 2023 fiscal year, it generated $28.18 billion from semiconductors and $7.39 billion from infrastructure software solutions.

However, analysts see Broadcom as a tech giant, not just a semiconductor company.

Its software segment is quickly expanding, thanks to strategic acquisitions like CA Technologies, Symantec’s enterprise security business, and VMware.

Between 2024 and 2027, the VMWare deal is predicted to increase infrastructure software revenue by 49% and generate $8.5 billion in pro-forma EBITDA (earnings before interest, tax, depreciation, and amortization).

In the Q4 2023 Earnings Call, CEO Hock Tan said Broadcom expected 2024 revenue to be $50 billion, significantly higher than the $35.8 billion the company generated in 2023.

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