Broadcom has expanded rapidly in recent years and currently ranks first in the global IC design industry. Its predecessor, Avago, used mergers and acquisitions as an important strategy for the company's development. In 2015 Avago acquired Broadcom, followed by M&A Netcom equipment maker Brocade, after two mergers and acquisitions. , Broadcom organizes restructuring by focusing on specialized areas and selling less connected businesses.
For example, Broadcom sold its original IoT business and WICED brand to Cypress in 2016 to focus on applications such as wireless network access equipment and mobile communications. After Brocade was merged, it retained the company’s storage of switchgear on fiber optic communications networks. In order to strengthen Broadcom’s advantage in storing products in the enterprise, other businesses are sold. Although Broadcom splits the acquisition of the acquired companies, the revenue still grows quarter by quarter, and the gross profit margin has increased from nearly 30% in 2016 to the current 49%. , It shows its ability to integrate in the company.
For Broadcom, if it can acquire MediaTek, although there may be overlaps in the wireless communications chip segment, Broadcom focuses on mid-to-high end product lines and appeals to large corporate customers. MediaTek focuses on cost and focuses on the low-to-medium market. Direct competition is limited.
On the other hand, Broadcom is focusing on TV sets for consumer electronics, and its products focus on wireless communications. In the mobile phone, only RF components and WiFi are not involved in the processor, so the system specification is predominantly low. MediaTek uses consumer electronics chips. As the main business, and long-term operations in mainland China terminal brand customers, in the input product supply chain, the series of related components as a strategy to expand their business, and take a dominant position in the supply chain. Both target customers and business model Differences and complementarities have a strategic effect on Broadcom’s further expansion.
In particular, although Broadcom’s key chip RF components are leading globally, in the 5G era, processor vendors such as Qualcomm’s own RF development model to provide a complete platform solution will threaten Broadcom’s position. Through mergers and acquisitions MediaTek, in addition to By leveraging on the development experience of MediaTek in the field of smart phones, it can also combine the advantages of its own RF components with its processing chips and acquire patented technologies for mobile communications, which will be helpful for the subsequent expansion of Broadcom’s 5G communications layout.
However, according to Broadcom’s strategy in the past, if MediaTek merged, MediaTek may maintain its independent operations after the merger, but it may cut sales for its non-focus areas. MediaTek’s current product line is diversified, and its associated with Broadcom products is very low. The possibility of business cutting and selling is not low.
In terms of Taiwan's industrial development, only MediaTek has high-end processor development capabilities for mobile phones. If it is acquired by Broadcom, it may result in the loss of R&D talents for long-term application processor development in Taiwan, plus the trend toward centralized mobile phone processors. With development, it is difficult for other companies in the country to have application processor development capabilities.
Secondly, if Broadcom really merges with MediaTek, it will become Taiwan's IC manufacturing industry second only to Apple's second-largest customer. Broadcom’s bargaining power will increase significantly, which will create potential pressure on China’s IC manufacturers.
Finally, in addition to its own growth, MediaTek has developed its development platform to integrate with Taiwan's component supply chain to provide customers with fast and flexible services. If mergers and acquisitions come true, Broadcom's business model is similar to that of Europe and America, and the model of MediaTek differs greatly. , In addition, it has no long-term cooperation relationship with Taiwan's mobile phone component supply chain. After the merger, it may have an impact on Taiwan's electronic components and components industry.
However, from another perspective, the mobile phone business currently being run by MediaTek will eventually face the bottleneck of market maturity and urgently need to develop other emerging applications. If it is not for acquisition and merger, it will make a strategic alliance with Broadcom through share exchange and mutual shareholding. In the model, an industry holding company was set up, the two sides conducted in-depth and tactical cooperation, and encouraged domestic potential IC design companies to join in to create an international team together, which has a positive effect on the development of domestic industries.