Broadcom’s long path to the trillion-dollar club, and Trump’s role

When Broadcom tried to buy rival Qualcomm for $120 billion in 2018, its efforts were thwarted. Qualcomm rejected the offer and the Trump administration declared the deal a potential threat to national security. 

In March of that year, Broadcom withdrew the bid, which would’ve been the largest technology deal on record, and said, “Qualcomm was clearly a unique and very large acquisition opportunity.”

As it turns out, Broadcom didn’t need it.

Broadcom shares soared 24% on Friday, their best day ever, and lifted the company’s market cap past $1 trillion for the first time. The chipmaker became the eighth member of tech’s 13-figure club. Since abandoning its Qualcomm offer, Broadcom shares are up more than 760%, trouncing Qualcomm’s 165% gain over that stretch. The S&P 500 is up 119%.

At the time of its announced acquisition effort, Broadcom’s official headquarters was in Singapore, which played into the Trump administration’s concerns. Broadcom filed to redomicile in the U.S., but Trump blocked the deal anyway.

Still, Broadcom CEO Hock Tan wasn’t deterred from taking big swings. Far from it.

Broadcom has since closed three deals valued at $10 billion or more, and it has ventured far outside of its core semiconductor market in the process. It agreed to acquire legacy software vendor CA Technologies for $19 billion in July 2018, and snatched up security software company Symantec for $10.7 billion in August 2019.

Tan’s biggest bet came in 2022, when Broadcom said it was buying VMware for $61 billion, jumping into the market for server virtualization. The deal took 18 months to close, and it trails only Microsoft’s $68.7 billion acquisition of Activision Blizzard and Dell’s $67 billion purchase of EMC on the list of biggest tech deals ever.

Broadcom “started as a semiconductor company and over the last six years, we kind of moved into infrastructure software, and that has gone very well,” Tan told CNBC’s Jim Cramer in a September interview. “The recent acquisition of VMware was essentially another step towards the direction of creating a very balanced mix between” chips and infrastructure software geared to the enterprise, he said.

Broadcom reported better-than-expected profit in its latest quarterly earnings report on Thursday, even as revenue came in just shy of estimates. Broadcom’s artificial intelligence business has lifted overall growth to rates typically reserved for company’s a fraction its size.

In the fiscal fourth quarter, AI revenue increased 150% to $3.7 billion, with some of that growth coming from ethernet networking parts used to tie together thousands of AI chips.

That drove an overall increase in revenue of 51% to $14.05…