Broadcom to be acquired in a $37-billion deal

Avago Technologies has agreed to buy Broadcom in a deal that will create a networking chip giant with a wide variety of products, including components for the burgeoning Internet of Things sector.

It has offered US$37 billion for Broadcom, including $17 billion in cash and equity valued at approximately $20 billion, it said on Thursday. The combined company will offer products for wired and wireless networks.

Both companies’ chips are found in power-line and wireless networks. Avago also makes chips for optical networks, while Broadcom’s are used in routers, connected-home and car equipment, and IoT devices. It recently announced support for Apple’s HomeKit platform, and chipsets for 802.11ac networks.

The companies expect to close the deal by next April, subject to approval from their shareholders and regulators. It will be interesting to see how much of a distraction this acquisition will be for Broadcom, which is battling Qualcomm—and to a lesser degree, Quantenna—for dominance in the high-end 802.11ac chipset market.

You’ll find Broadcom chipsets in a number of late-model Wi-Fi routers, including the D-Link DIR-890L and Netgear’s Nighthawk X6. To date, however, only Qualcomm has a MU-MIMO chipset in a retail product, the Linksys EA8500.

The acquisition is just the latest in a period of consolidations large and small for the chip industry: Intel is picking up some custom server chip technology with the acquisition of Altera, while NXP Semiconductors plans to buy Freescale Semiconductor to build a $40-billion company with strengths in automotive electronics and IoT.

TechHive executive editor Michael Brown contributed to this story.