According to some media reports (Wall Street Journal), one of Apple’s biggest suppliers and a leading global chip-making giant, Broadcom, is looking to sell its RF (radio frequency) business unit. A subsidiary of the company’s larger wireless-chip business, Broadcom’s RF division produces RF filters for smartphones and is currently valued at around USD $10 billion by the company’s board for the supposed sale.
The company, in the 2019 fiscal year, had announced total revenues of around $2.2 billion from the RF unit, which is also one of the original businesses of its predecessor company Avago. And while some experts believe, the unit is worth $10 billion, it is yet not clear if that is achievable and if there will be a deal. The process is at an early stage. Broadcom obliquely referred to the move when it reported results last week, saying it was reclassifying its wireless units as outside its core semiconductor business.
In recent years, Broadcom acquired two major software companies - CA Technologies Inc in 2018 for $18.9 Billion and Symantec Corp.’s corporate business for $10.7 billion this year. The push into software came after the company was thwarted in a long-lasting effort to buy Qualcomm Inc. for more than $100 billion.
Broadcom’s RF unit works on the development of FBAR (Film Bulk Acoustic Resonator) Filters. While the FBAR technology has proven to be a success for majority of its production timeline (the filters are used in iPhones), in recent times, the advent of more advanced and sophisticated technologies from rivals like Qorvo, has proved to be a stiff competition. Such technologies, which involve smaller components and are more advanced, could replace FBAR completely, making the unit less desireable to Broadcom as a going concern.
New RF chips are considered crucial to getting the best possible performance out of the latest phones for 5G - the new technology standard that is expected to revolutionize wireless communications. Qorvo and other rivals including Qualcomm and Skyworks Solutions have won spots in new 5G phones from Samsung Electronics, Huawei Technologies and LG Electronics.
Regarding suitable suitors/buyers for the sale, Broadcom currently does not have any big names lining up to buy the unit. However, experts believe, with Apple in the process of building its own in-house modem business and its recent acquisition of Intel’s smartphone business, might be interested in this acquisition. An acquisition of Broadcom’s RF unit fit well with Apple’s upcoming networking projects. The iPhone maker is thought to account for around 25% of Broadcom's overall net revenue for the 2018 fiscal year. And though there is a small chance Apple may make an offer, it may still be concerned about the new owner of the unit if another company buys it.