Broadcom Inc. is looking to sell one of its wireless-chip units, a move that would accelerate the company’s shift away from its roots as a semiconductor maker. Broadcom is working with Credit Suisse Group AG to find a buyer for its RF unit, a segment of its wireless-chip business that makes filters used in cellphones to clarify signals, according to people familiar with the matter.
The unit had $2.2 billion in revenue in Broadcom’s 2019 fiscal year and is one of the original businesses of predecessor company Avago. It could be worth $10 billion, some of the people said, but it is not clear if that is achievable and there may not be a deal. The process is at an early stage, the people said.
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.
On a conference call to discuss results, Broadcom Chief Executive Hock Tan called the wireless businesses “stand-alone franchises” that do not fully mesh with the company’s other operations.
Broadcom, historically known for semiconductors that go into cellphones and networking equipment, in recent years has pushed into the more lucrative software business through two big acquisitions. It paid $18.9 billion for CA Technologies Inc. in 2018 and recently closed a deal to buy Symantec Corp.’s corporate business for $10.7 billion. The push into software came after the company was thwarted in an effort to buy Qualcomm Inc. for more than $100 billion.
Other units in the wireless business include two that also supply smartphone makers—mainly Apple Inc., which accounted for roughly 25 percent of Broadcom’s net revenue in the 2018 fiscal year. One makes combo chips that enable Wi-Fi, Bluetooth and GPS and brought in $2.2 billion in revenue in fiscal 2019. Another makes custom mixed-signal products that enable touch-screen technology and wireless charging and had $1.1 billion in revenue, though Tan noted that figure is expected to drop to $500 million in fiscal year 2020. There is also a smaller segment classified as noncore that is focused on industrial products.
The RF unit is a market leader in so-called FBARs—film bulk acoustic resonators—that are used in cellphones and base stations to filter out unwanted radio transmissions. But in recent years it has faced increased competition. One rival, Qorvo Inc., has developed an alternative filtering technology that is tiny, reliable and can replace traditional FBARs.
New RF chips are considered crucial to getting the best possible performance out of the latest phones for 5G—a new technology standard that is expected to revolutionize wireless communications. Qorvo and other rivals including Qualcomm and Skyworks Solutions Inc. have won spots in new 5G phones from Samsung Electronics Co., Huawei Technologies Co. and LG Electronics Inc.