After the failure to acquire Qualcomm, which companies will likely become Broadcom's next target?
According to a report from Reuters, Wall Street analysts have suggested that after U.S. President Trump blocked Broadcom's attempt to acquire Qualcomm, the chip giant may now turn its attention to other targets, including U.S.-based Xilinx and Israeli tech firm Mellanox. This shift comes as the U.S. government raised national security concerns over the original deal.
On October 13th, President Trump officially halted Broadcom’s proposed $130 billion acquisition of Qualcomm, citing risks to U.S. technological leadership and national security. The decision sent shockwaves through the tech sector, with analysts quickly weighing in on the implications. Many believe that while Broadcom may no longer pursue Qualcomm, it is likely to continue its aggressive M&A strategy by targeting other semiconductor companies.
Stacy Rasgon, an analyst at Bernstein Research, noted that although Broadcom might still explore alternative ways to acquire Qualcomm, the regulatory hurdles are significant. "This potential deal seems to be coming to an end," she said, adding that the U.S. government's strict stance makes it unlikely for any new proposal to gain approval soon.
Craig Ellis, an analyst at B Riley, echoed this sentiment, stating that Broadcom will probably refocus its efforts on other communication-related acquisitions. He believes the company will seek out firms that can complement its existing product portfolio, such as Xilinx and Mellanox.
Xilinx, based in San Jose, develops chips used in wireless communications, while Mellanox specializes in high-performance networking solutions for servers and storage systems. Both companies offer products that align well with Broadcom’s current offerings. Moreover, their market values—around $20 billion for Xilinx and under $4 billion for Mellanox—make them attractive targets for a company with substantial financial resources.
In fact, Broadcom’s CEO, Hock Tan (previously known as Chen Fuyang), has built the company into a major player through a series of bold acquisitions. Starting as CEO of Avago Technologies in 2006, he grew the company’s market value from $3.5 billion to over $100 billion in less than a decade. In 2015, Avago acquired Broadcom in a $37 billion deal, and in 2017, Broadcom bought Brocade Communications for $5.5 billion, solidifying its position in the chip industry.
With approximately $11 billion in cash and $9 billion in annual free cash flow, Broadcom is well-positioned to pursue smaller-scale acquisitions like Mellanox. Analysts believe the company has the financial firepower to continue its M&A strategy, even if it cannot secure the Qualcomm deal. As the tech landscape continues to evolve, Broadcom’s next move could shape the future of the semiconductor industry.
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