The European Commission has approved Avago Technologies’ acquisition of Broadcom (Avago to Buy Broadcom for $37 Billion). The EC’s investigation showed that the company’s portfolios are mainly complementary; Broadcom produces ‘off-the-shelf’ chips for the broadband and connectivity markets, while Avago makes custom chips for special applications.
Some concerns were raised about the vertical relationship created by the acquisition, as Avago supplies IP to some of Broadcom’s rivals. Avago addressed these concerns by entering into commercial agreements with other ‘switch chip’ makers, which will ensure the continued availability of Avago’s IP.
