On December 19th Broadcom announced that it had hired Credit Suisse Group to find potential buyers for its RF division. The RF division is part of the wireless chip division, which produces thin-film cavity acoustic resonators (FBAR, Film Bulk Acoustic Resonator), a common component in smartphones such as the smart hand.
Broadcom has been a supplier to Apple for many years and works closely together. In fiscal 2019, the division generated $2.2 billion in revenue for Broadcom, which is estimated to be valued at up to $10 billion.
With the FBAR market becoming more competitive in recent years, Qorvo is Abroad’s main competitor, with smaller filtering technologies and the complete replacement of FBAR technology, so Broadcom’s interest in the RF division has waned. At the same time, orders between Broadcom and Huawei have also been affected by the impact of the environment, which is a significant loss. After the sale of the division, Broadcom can shift its focus away from semiconductors and focus on software.
According to Broadcom Chief Financial Officer Thomas Krause, the company sees an opportunity for similar consolidation in infrastructure software areas such as hybrid cloud computing and appears intent on moving in the direction of software.
Notably, in its latest quarterly earnings report, Broadcom has reclassified its wireless business beyond its core semiconductor business, which means the company is less focused on that segment. The move to sell the RF division does not seem to come as a surprise, as analysed from both internal and external environments.
Who will buy Broadcom RF? There are no immediate rumors, but industry sources have speculated that Apple may be involved. Creative Strategies analyst Ben Bajarin noted on Twitter that Apple is already working on its own RF technology to become a successor to the Broadcom business. In fiscal 2018, about 28% of Broadcom’s net revenue came from Apple. In June, Broadcom extended its supply contract with Apple by two years, and Broadcom promised to provide Apple with custom RF front-end components and modules. If Broadcom continues to sell other parts of its wireless business, Apple may find other acquisition targets.