After the failure to acquire Qualcomm, which companies will likely become Broadcom's next target?
According to a Reuters report, Wall Street analysts have suggested that after U.S. President Trump blocked Broadcom’s attempt to acquire Qualcomm, the chip giant is likely to shift its focus toward other targets, including U.S.-based Xilinx and Israeli tech firm Mellanox. The decision by Trump to block the $120 billion deal raised concerns over national security, prompting speculation about Broadcom’s next move in the competitive semiconductor industry.
On the 13th, President Trump formally prohibited the acquisition, citing risks to U.S. technological leadership. Analysts on Wall Street quickly reacted, noting that while the deal may be dead, Broadcom is unlikely to abandon its acquisition strategy. Many believe the company will look for alternative targets, with Xilinx and Mellanox emerging as top possibilities. These firms are seen as complementary to Broadcom’s existing product lines, especially in areas like wireless communications and data center infrastructure.
Stacy Rasgon from Bernstein Research stated that although it's unclear if Broadcom will pursue another deal for Qualcomm, the regulatory hurdles make such an effort highly unlikely in the near term. Similarly, Craig Ellis from B Riley emphasized that the company will continue to seek acquisitions in the broader communications sector, looking for companies that can enhance its offerings.
Xilinx, based in San Jose, provides chips used in wireless networks, while Mellanox specializes in high-speed interconnects for servers and storage. Both companies offer strategic value to Broadcom, which has a history of aggressive M&A activity. Xilinx’s market cap stands at around $20 billion, while Mellanox is valued at less than $4 billion, making both potential targets financially feasible.
Broadcom’s CEO, Hock Tan (formerly known as Chen Fuyang), has built the company into a major player through a series of bold acquisitions. Starting at Avago Technologies in 2006, he grew its market value from $3.5 billion to over $100 billion within a decade. In 2015, Avago acquired Broadcom, and later, the company bought Brocade for $5.5 billion, solidifying its position in the chip market.
With approximately $11 billion in cash and $9 billion in annual free cash flow, Broadcom is well-positioned to continue its acquisition strategy. Analysts believe the company has the financial firepower to target smaller but strategically important firms like Mellanox. As the semiconductor landscape continues to evolve, Broadcom’s next move could shape the future of the industry.
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