A wave of consolidation sweeping across the chip industry has produced the biggest acquisition seen in the technology world since the late-1990s dotcom bubble, as Singapore-based Avago agreed yesterday to pay $37bn in cash and stock for US rival Broadcom.
The combination is the most dramatic evidence yet of the pressures building in the tech sector as once high-growth companies have been forced to face the realities of a maturing industry. The rise of groups such as Apple and Samsung has also squeezed many parts of the tech supply chain, forcing component makers to race for greater scale to survive.
Avago has already emerged as one of the sector’s most acquisitive companies, striking three deals in the past year alone. It said it would pay $17bn in cash and about $20bn in stock to acquire California-based Broadcom, which makes communication chips used in data centres and mobile devices made by companies including Apple and Samsung.