The $600 Billion AI Chip Giant

Note: All I would like to point out is that Broadcom’s market cap is $771 billon now.

Broadcom is the second largest AI chip company in the world.

Thanks to that, the company is the 11th largest company in the world. Over $600 billion as of this writing, bigger than Visa and just behind TSMC.

It is a bit crazy considering that in 2009 the whole company was worth $4 billion. 150 times growth in 15 years is kind of wild.

But what is Broadcom? How did they get this big? What do they do? In this video, how a little chip division grew to be a $600 billion AI juggernaut.

Beginnings

The company now known as Broadcom started as a spinoff of a spinoff.

In March 1999, the iconic California-based computer-maker Hewlett-Packard decided to split into two.

Everything unrelated to computers, IT or printers would be put into the new company - Agilent Technologies.

The new publicly-traded company covered HP's former test and measurement, medical products, chemical analysis, and semiconductor businesses. Accounting for about $8 billion of HP's $47 billion total revenues.

Analysts saw this as a necessary re-focusing of a business that had grown too large. In an interview at the time, Agilent's new CEO Ned Barnholt positioned it as a coming-out of sorts from the shadows.

Agilent's debut on the markets was one of the biggest IPOs in history up until then. The stock popped nearly 70%.

But the new company struggled to grow in the rough years after the bursting of the Dotcom and fiber optic bubbles. The company's revenues shrank nearly 50% from 2000 to 2001.

And soon they started laying people off and selling entire divisions to raise money and simplify the business. So in June 2005, they put up their chip division - called the Semiconductor Products Group - up for sale.

Spinning Off the Chips

There followed a brief auction... Which PE firms KKR and Silver Lake Partners won for $2.65 billion in August 2005.

The government of Singapore also co-invested in the deal through their Temasek and GIC sovereign wealth funds. Singapore had been a partner with Hewlett-Packard since 1970, when HP first chose to set up a factory there.

It was a glorious time to be in private equity. Some of the biggest private equity deals in history were closed during this 2006-2007 period before the Global Financial Crisis.

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