SAN FRANCISCO—Broadcom Corp. President and CEO Scott McGregor Tuesday (July 24) downplayed speculation that Samsung Electronics Co. Ltd.'s acquisition of CSR plc's mobile business posed a threat to the company's business following Broadcom's better-than-expected second quarter financial report.
"In the short to medium term, I don't it'll affect our business at all," McGregor said. Longer term, McGregor said, the impact will depend on whether Samsung can turn the CSR business into something that can compete with Broadcom.
McGregor described the 310 employees transferred from CSR to Samsung as part of the deal as a "fairly small number of employees" and said CSR's connectivity technology is not particularly advanced. He said CSR never had any success creating combo chips that combine Wi-Fi capability with other connectivity technologies.
"I think we've demonstrated over the last five years that doing good, well-integrated, technically performing combo products is harder than it seems," McGregor said. "And so, if we continue to innovate and keep doing good products, I don't expect it will affect us in the long term."
McGregor said he doesn't expect the CSR technology to be a technical threat to Broadcom's technology. He said Samsung is more likely to use resulting chips for lower-end products, which could impact some of Samsung's suppliers in Taiwan. I don't see it as a threat in the prime smartphone business or in most of the businesses" where Broadcom supplies Samsung, McGregor said.
Broadcom reported second quarter sales that exceeded analysts' expectations and came in at the high end of the company's own sales target. The company said it expects to eclipse $2 billion in sales in the third quarter for the first time.
McGregor reported that Broadcom is seeing some demand weakness in Europe, as well as some pockets of weakness in Asia. But the company expects sales to improve slightly on a sequential basis in the third quarter in its Infrastructure and Networking segment and to improve significantly in its Wireless and Connectivity segment. McGregor said Broadcom continues to believe it is gaining market share in several markets where it competes, offsetting negative macroeconomic impacts that have impact on the guidance of other chip companies.
"What's different for us is, we do believe we are taking share, so we think we've been able to offset some of the marco headwind with the ability to take share in a number of our markets," McGregor said.
BRCM should be scared, they have forget about Samsung sockets. As Samsung is leading Smartphone and Tablets those sockets will be out range. Essentially 20 - 30% of the market or so. Also Samsung cousin SEMCO ( Samsung Electro Mechanical Company) is one of the largest Module maker for Wifi, GPS, and Bluetooth chipsets. As smart phone/tablet/ Laptop/ ultrabook vendors buy modules. Also QCA should be worried as well. unless they build Wifi/GPS/Bluetooth into Snapdragon App processor line up.
I certainly don't believe that anything McGregor said implied that Broadcom does not take Samsung seriously. Samsung is a serious Broadcom customer, for one thing.
He basically said he doesn't think that the technology acquired was going to be able to challenge Broadcom's products from a technical standpoint, particularly not in the near term. He also said that in electronics companies from time to time make acquisitions such as this to increase vertical integration but that, generally, it doesn't seem to work out that well. I think his argument is supported by the trends of the last 20 years.
A very sound suggestion to the CEO of Broadcom. Of course no one expects him to panic in the public. Yet, he has to be ready to innovations from Samsung which we expect in coming quarters after this acquisition.
It will very naive for Broadcom not to take Samsung very serious. This company has free cash and is noted to invest in any sector they want to rule. Broadcom must internally work hard if they want to say in business.
I appreciate the confidence levels of Broadcom CEO but Samsung will definitely have a better strategy in mind for such key acquisition. So in the long term Broadcom should watch out for any products from samsung acquired CSR group and be ready for the competition.
PS- From CSR's website, I would say the answer to your Bluetooth question is apparently yes. Excerpt below.
CSR is a leading provider of multi-function semiconductor platforms for the auto, camera, document imaging, low-energy connectivity, and wireless voice & music markets — as well as semiconductors for the handset and many other consumer electronics markets. Our core expertise is in the areas of audio, connectivity, location and imaging technologies and our technology portfolio includes: Bluetooth® and Bluetooth Smart; Global Navigation Satellite Systems (GNSS) and GPS location products; FM radio; Wi-Fi; Near-Field Communication (NFC); audio and associated codecs; and imaging and next-generation video processing technologies.
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