Broadcom said to be in buyout talks with rival chipmaker Avago

May 28, 2015 15:42
Broadcom is reportedly in merger talks with rival Avago, the latest in a wave of consolidation moves in the semiconductor sector. Photo: Bloomberg

Avago Technologies, the former semiconductor unit of Hewlett-Packard Co., is in advanced talks to buy rival chipmaker Broadcom Corp., according to the Wall Street Journal. 

A deal worth about US$35 billion could be announced as soon as Thursday, the paper said, citing people familiar with the matter.

Broadcom, which supplies chips for networking gear and for tablets and smartphones, has been struggling to lift its revenues.

Its CEO Scott McGregor said earlier this year that it is "really economically difficult to be a small semiconductor maker now".

Avago, which operates out of San Jose and Singapore, makes chips for wireless-communications and corporate-data-storage markets.

But, like Broadcom, it too doesn't have any kind of dominance over individual markets that larger players such as Intel and Qualcomm enjoy, the Journal noted. 

Against this backdrop, executives of Avago and Broadcom have been in merger discussions. 

Avago once was part of Agilent Technologies, which spun off from H-P in 1999. 

The company pursued several acquisitions in the semiconductor sector in the past two years, but a deal for Broadcom would be by far its biggest ever, the report noted.

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