[Zhongguancun Online Original] The most lively technology news in the past few days is the $130 billion stock + cash offer proposed by Broadcom (Broadcom, NASDAQ: AVGO) to Qualcomm, which is a 28% premium to Qualcomm's market value. Qualcomm's board of directors has officially rejected the deal. So who is this Broadcom, which is trying to swallow Qualcomm and achieve the highest acquisition case in the history of semiconductor industry? What are his relationships with HP ? After reading this article, you will understand the historical origins of these semiconductor industries.
Acquisition invitation PPTh
HP and Silicon Valley
Broadcom has undergone many mergers and acquisitions in history, and many well-known brands have become part of the new Broadcom. The current Broadcom business integrates the businesses of three historically heavyweight semiconductor companies: Anhua Gao , Broadcom and LSI. The following picture clearly explains the origin of Broadcom today, which is fundamentally derived from HP's semiconductor business that began in 1961.
This picture allows you to clearly understand from the timeline how Broadcom, which tried to acquire Qualcomm today, came from
. HP, now retains some of the main business of the HP brand, is very close to each of us, and is computers and printers. But in the early days of its establishment, HP did not produce these things because these things were not yet born.
HP 200A
HP started with Hewlett and Packard in the garage in Paraoto, California, dating back to January 1, 1939 in the last century. Their start-up capital was $538. The first product they produced was to use Packard's research results to produce a 200A resistive capacitive frequency generation oscillator. This product was used to test audio equipment. At that time, it was a breakthrough in product structure. Disney bought 8 units to make the movie "Fantasy".
HP's cesium atomic clock represents a huge leap in human timing technology
HP has since grown stronger and stronger. However, the products are all related to measurement equipment and signal generation equipment. For example, HP's cesium atomic clocks are even known as industry standards, and the amount is very large for equipment that needs time delivery. These devices are the root cause of HP's growth and growth.
Carly changes drastically: From HP to Agilent
Later in the 1980s, HP was engaged in the production and sales of personal computers and printer equipment, and soon became the top in the industry. If you bought a computer in the 1980s and 1990s, you would know that the brands at that time were IBM, HP, Combat , etc. The turning point occurred in the 1990s. At that time, the two founders of HP retired and appointed the first CEO from the outside world, Carly Fiorina .
The series of operations of Carly is the root of HP's huge changes
The HP computer in 1986 was not standardized at that time
HP's series of operations were the origin of HP's major changes. The first step was to divest HP's starting business, that is, measurement equipment, and these businesses established a new company, named Agilent Technology, which includes HP's semiconductor business. When I was playing with the mouse and changed the micro switch by myself in my early years, Agilent's micro switch was almost the only choice, not as many as it is on the market today.
Many people should only know Agilent, and they don’t know much about it. It is the trademark of HP 6
Combat Computer After the acquisition, HP used it for a long time
Part 2. In 2001, HP acquired Compbat Computer. The transaction reached 25 billion US dollars that year. This number was a huge deal even today. After the acquisition, HP became one of the largest computer and office equipment manufacturing companies in the world. The Agilent business that was separated from
Agilent to Avagail and
was smooth sailing because the product has a higher technical content. After all, the foundation of Silicon Valley is almost the oldest technology company. Agilent Technology has divested a large business, and this business has also been a lot of trouble, but the core of the business is one word: selling.
Agilent bought Philips' medical business
In 2001, Agilent Technology sold the medical business to Philips. This was a large business of HP back then, and it also had a very long history. It was the second field that HP entered in addition to measuring instruments and had a long history.
KKR and Silver Lake acquired Agilent's semiconductor business and renamed Avago Avaga
In 2005, two capitals from KKR and Silver Lake, which jointly bought the semiconductor business from Agilent Technology for US$2.66 billion, and renamed Avaga , which is the beginning of the subsequent story.
Keysight retains the measurement instrument business that HP started...
In 2014, Agilent split again, divided into two parts. The electronics part is called Keysight, and the chemical and biochemical parts are still called Agilent Technology. At this point, Agilent, Anwargao, Keysight Technology, etc. derived from HP are all industry giants, and we can see how powerful HP was in this field at the time.
KKR and Yinhu Capital behind Anhua Gao
Let’s take a look at what KKR and Yinhu, which bought Agilent semiconductor business, did that year. They are not technology companies, but capital for leveraged acquisition transactions. They can be said to be the most successful transaction capital in Wall Street history. KKR’s cumulative transactions in history have exceeded US$400 billion.
KKR is one of the most successful leveraged trading capital
KKR's three founders are from the old investment bank Bear Stearns, which fell in the financial crisis. KKR is the first letter of the three founders' names, Colberg Kravis Roberts. In 1985, its acquisition of Storer Communications cable company worth $2.4 billion, KKR received an astonishing $23 million in management fees with an investment of just $2.5 million. But no one has ever stood up to question the logic of this charging method... How awesome is KKR? Currently, the capital in the management exceeds US$148.5 billion, and there are as many as 108 companies under KKR, with annual revenue exceeding US$160 billion and a total of nearly 1 million employees.
SilverLake focuses more on investment in the field of technology
Silver Lake Capital is a company specializing in leveraged trading of mature enterprises. It is different from the venture capital we are familiar with today. The investment scale is often relatively large, but they are all technology companies with mature business models. We are familiar with many of the objects it has invested in and traded, such as ebay, avaya, Philips Semiconductor (renamed NXP Semiconductor after acquisition), etc.
strongman Hock Tan
Hock Tan's name is not likely to be exposed in domestic media, it should be related to his low-keyness, so-called night walks in the brocade. Hock Tan himself is an American descendant of Malaysian . Hock Tan was born in Penang, Malaysia in 1953. He arrived in the United States at the age of 18 to study the famous MIT , and then obtained a management degree from Harvard University.
Hock Tan once donated US$4 million to his alma mater MIT
In the early years, Hock Tan worked in Malaysia and Singapore in the field of financial investment. Later, he worked in executive positions at PepsiCo and General Motors. It can be said that from his early experience, he was not the kind of executives rooted in the semiconductor industry. His advantages were in the fields of finance, finance, etc. For example, from 1992 to 1994, he worked as a financial VP at Commodore International.
Speaking of IDT, old DIY players should be familiar with this company. They also produced CPU
Hock Tan's career as the "top leader" started in 1999. He served as the president and CEO of ICS (Integrated Circuit Systems) and then chairman of IDT's board of directors from 2005 to 2008. Users who played DIY at the end of the last century may be familiar with IDT. They were also a company that created X86 processors back then. Do you still remember Win Chip C6? This should be the first record of entering the semiconductor industry in his public resume.
Hock Tan is a typical American Dream implementer. He talked and laughed with Trump
In 2006, he began to serve as CEO of Anwargao. From then on, the legend of Anhuagao was started.He has been quite low-key before, but recently, in order to acquire Qualcomm, he had to make a high-profile statement, such as being close to Trump, moving the company's headquarters from Singapore to the United States, etc.
AVAGU's early
KKR and Yinhu Capital boughtAVAGU, Hock Tank served as CEO in 2006 and achieved an IPO in 2008, raising US$400 million. At that time, the share price of Anhua Gao's IPO was $15 per share, but today it has reached around $260 (the author did not calculate whether there is any ex-rights). At that time, it only took US$2.66 billion to buy Anhuagao, and today the market value of Broadcom has reached more than US$100 billion.
Today, the share price of Broadcom has reached US$265 per share
Why can Anhua Gao expand so quickly? This is due to the continuous purchase and purchase since its establishment, that is, the continuous purchases are made.
The original Philips bulk acoustic parts
In 2007, Anhuagao acquired the Polymer Optical Fiber Business Department (POF) of Infineon . Of course this is not all. In 2008, Anwargao acquired the Bulk Wave Acoustic business in Munich. However, the transaction volume is not large, and the latter's acquisition is only 21.5 million euros.
Anhuagao - the logo of high-end mouse engine
In 2009, Anhuagao's cumulative shipment of mouse photoelectric controllers reached a milestone of 1 billion. After that, Anhua Gao had little trouble until 2013.
Anhua Gao to Broadcom
2013 can be regarded as the beginning of Anhua Gao's series of mergers and acquisitions. In April 2013, Anhua Gao acquired CyOptics, a company that makes optical components, with an acquisition amount of US$400 million. The acquisition strengthened Anhua Gao's leadership in the optical fiber products field. This is just the beginning. In the same year, Anhua Gao acquired Javelin Semiconductor, strengthening its layout in the field of wireless communications.
This acquisition is considered a strong alliance
0 At the end of 2013 and early 2014, a huge merger that shocked the semiconductor industry was born: Anhuagao acquired LSI for US$6.6 billion. This acquisition made Anhuagao's business line more extensive, especially LSI strengthened its storage business, especially the storage business for data centers. In 2014, Anhuagao's other business was the acquisition of PLX Technology, which cost US$300 million. PLX's specialty area is PCI-E connection solutions. This acquisition is believed to strengthen the fields of storage and other fields. PLX+LSI has both storage and interconnection.
AVG's acquisition of EMULEX strengthened storage
In 2015, AVG "only" acquired one Emulex, with a purchase price of US$8 per share, with a total price of approximately US$600 million. This acquisition is still an enhancement of LSI's acquisition. Emulex's business is similar to PLX, and AVG's acquisition once again strengthened the enterprise-level storage business.
AVAG was smaller than Broadcom when it acquired it, and became the third in the industry after the acquisition
AVAG and Broadcom's business value after the merger
2016 is a milestone year. That is, last year, Anhua Gao acquired Broadcom, with a price of up to US$37 billion. The $17 billion of the merger was the stock paid to Broadcom in cash, and US$20 billion was the stock. This acquisition was the largest merger in the history of semiconductor industry and even technology companies. After the merger, Anhua Gao also changed its name to Broadcom Limited, which is the origin of the name Broadcom, which proposed an acquisition invitation to Qualcomm today.
Anhua Gao's Selling Selling Selling
We said that KKR, Silver Lake and Hock Tan themselves are financial and capital-led backgrounds. Acquisitions are not all, but also sales. To put it simply, it is to buy a company as a whole, break the business apart and reorganize the existing business, and sell the unwanted business.
optical module will be the trademark of Foxconn in the future
In 2015, before acquiring Broadcom, Anhua Gao made a transaction and sold the bar optical module business to Foxconn . Do you still remember what you mentioned earlier when you bought CyOptic? That was 2013, right, I sold the optical module business in 2015, and the transaction amount was unknown.
acquired Axxia, which was sold by Anwar Gao, and Intel strengthened the enterprise-level business
In 2014, after acquiring LSI, Anwar Gao sold part of LSI's business, Axxia Networking's related businesses and assets to Intel, with a transaction amount of US$650 million.
The entire flash memory business has been sold to Seagate
LSI's huge asset, called the flash memory business department, and was sold to Seagate. The flash memory business department may be a bit unfamiliar with everyone. If you want to say that Sandforce may have played DIY, it is known that this business has sold for US$450 million. Of course, it also includes many similar transactions, buying the whole thing, leaving useful and unwanted selling to peers in the industry, with their own market value getting higher and higher, while selling the business reduces the cost.
Many companies in the semiconductor industry are actually doing business that do the exclusive market, so the industry's gross profit margin is very high. Anhua under Hock Tan's rule is as high as Broadcom, and it is a representative of outstanding performance. Before the acquisition, Broadcom's gross profit margin was 55%. After the merger, Hock Tan not only allowed the company to achieve a 5% annual growth rate, but Broadcom also exceeded the 60% promised to shareholders with a gross profit margin of 63%, which fully reflects Hock Tan's ability.
was rejected. It was just that
was just the beginning when Broadcom proposed an acquisition invitation to Qualcomm, it actually triggered an earthquake in the semiconductor industry. All companies in the entire industry have begun to have their own concerns about the future.
2016 Global Semiconductor Enterprise Ranking
Let’s take a look at the ranking of global semiconductor companies in 2016. The fifth is Broadcom after the acquisition. It now proposes an acquisition invitation to No. 4 Qualcomm, and Qualcomm itself has also acquired No. 10 NXP Semiconductor, which will be third after the merger. This will obviously lead to a high concentration in the industry, which many companies are unwilling to see.
Will Google and Apple propose an acquisition of Qualcomm?
In addition, as a leading company in the semiconductor industry, Intel should not be able to make the case for Broadcom bigger. What's more, there are buyers outside the industry who are not short of money. For example, Google, which has a large layout in the mobile field, spent 10 billion to buy Motorola. It was obvious to Google to get the bunch of patents after Qualcomm got it. Google is not short of the capital for acquisition, and don't forget Apple, which has a market value of nearly one trillion US dollars...
The invitation was rejected was just the beginning
For Broadcom and Hock Tan, Qualcomm rejected the $130 billion acquisition invitation, but it was just the beginning. Since it started, there was no reason to stop. The invitation was just the prelude. The annual drama is being staged. As media and users, we can quietly watch the changes in the plot.
