Acquiring Broadcom will enable Avago Technologies to beat fellow fabless chip companies MediaTek and AMD, and become the world's second-largest fabless IC supplier in terms of revenues, according to Digitimes Research.
With the acquisition, Avago will be able to enhance its product line and target a wide range of market sectors including front-end servers and data centers, mobile devices and wearable products, said Digitimes Research. Besides, with a strengthened product portfolio, Avago is ready to seize opportunities in the Internet of Things (IoT) sector.
Avago specializes in the development of radio-frequency components and power amplifiers for use mainly in smartphones. Avago entered the storage chip market by acquiring LSI in 2014. With the upcoming acquisition of Broadcom, Avago expanded further its offerings to include wire and wireless chips, Digitimes Research observed.
Avago recently announced the company will pay US$17 billion in cash and US$20 billion in stock to acquire Broadcom. The acquisition is expected to complete by the end of the first quarter, 2016.
The acquisition will also make a positive contribution to Avago's customer portfolio by being a major supplier of Samsung Electronics and Apple, Digitimes Research believes.