Broadcom, a computer chipmaker, has successfully finalized its acquisition of cloud computing giant VMware for a staggering $69 billion (£55 billion), marking one of the tech industry’s most significant takeover deals.
Regulators globally meticulously reviewed the deal, awaiting the final approval from China. Concerns arose regarding potential implications in the backdrop of escalating US-China tensions.
The green light for this acquisition cme after a recent meeting between Presidents Joe Biden and Xi Jinping during the Apec summit in the US. Broadcom, headquartered in San Jose, California, specializes in semiconductor chip design, development, and supply, alongside offering infrastructure software solutions.
On the other hand, VMware, based in Palo Alto, California, focuses on developing virtualization software, enhancing computer system efficiency by running virtual computers on physical ones.
Hock Tan, Broadcom’s president and CEO, expressed enthusiasm about merging teams to establish “the world’s leading infrastructure technology company.” The vision is to create private and hybrid cloud environments enabling seamless app deployment across platforms.
To finalize the deal, Broadcom navigated and secured legal merger clearances in various countries, including Australia, Brazil, Canada, China, the European Union, Israel, Japan, South Africa, South Korea, Taiwan, and the UK.
Following the acquisition, VMWare’s shares will no longer trade on the New York Stock Exchange (NYSE), the company confirmed.
The backdrop of a trade war between the US and China since 2018, marked by tariffs and trade barriers imposed by former President Donald Trump, has significantly impacted various industries. Advanced chips, integral in numerous technologies from smartphones to fighter jets, have become a focal point in recent trade disputes.
While tensions persist, the recent Apec summit facilitated discussions between President Biden and President Xi, culminating in agreements on issues like climate change and military communication. Despite differences highlighted by President Biden, Chinese state-owned media termed the summit as “historic,” signaling a potential turning point in relations.
Broadcom has faced prior entanglements in US-China tensions. In 2017, its attempted takeover of rival Qualcomm, poised to be the largest-ever deal, was blocked by Mr. Trump on national security grounds. Concerns were raised that the acquisition could enable China to surpass America in the development of 5G technology. Subsequently, Broadcom opted to relocate to the US from Singapore.