COLORADO SPRINGS, Colo. — Broadcom Corp.'s corporate acquisition binge of 1999-2002 gave the communications chip specialist indigestion, and Lanny Ross has been cutting operations since he replaced Henry Nicholas as CEO last year. In recent weeks, however, existing and potential customers have expressed rising concerns that acquired communications processor architectures may be killed off.
"Probably every broad-based comms IC vendor has been doing some of this, given the length of the recession," said a designer at one networked-storage OEM. "But Broadcom's cuts seem to be wider and deeper, and they don't seem to be coming clean with the customer base on what's still on the drawing board."
Since mid-1999, Broadcom has acquired more than 20 communications companies at the intellectual-property core, silicon and subsystem levels. The paring back of operations began when Ross replaced Nicholas, but three sources independently said Nicholas had continued to play an active role in deciding how far to purge many of the acquired companies.
Wireless acquisitions continue to find favor inside Broadcom, and Ross stressed wireless and mobility opportunities during an analysts' day at the company's Irvine, Calif., headquarters this month.
But small acquired companies specializing in broadband wireline systems and optical networks had been pared back to a few engineers by late 2002. One source who had been involved in physical-layer IC design said that Altima Communications, Allayer Communications and NewPort Communications had each been reduced to a handful of employees by early 2003.
The big concern over the summer was the fate of control plane processors from SiByte Inc., server bus-control processors from ServerWorks and security processors from Blue-Steel Inc. One developer who had looked at the ServerWorks Grand Champion north-bridge logic design said Broadcom "has been slow to acknowledge that certain programs are dead or on hold. It makes it very difficult to decide when and where to design a processor in."
In the 10Q form it filed with the U.S. Securities and Exchange Commission in the summer, Broadcom said Intel Corp., with which it holds a license to CPU bus and backplane connectivity for the Grand Champion LE, had been less than forthcoming in providing details for working with the next generation of server processors.
"Intel may continue to license aspects of design," one financial analyst commented, "but they are not enabling Broadcom by providing timing and I/O details, since they are competing in this space as well."
Broadcom shook up ServerWorks in late March when it ousted the company's CEO and founder, Raju Vegesna, over "differences in product strategy." ServerWorks' vice president of business development, Kimball Brown, and its vice president of marketing, David Pulling, left after Vegesna was let go.
Broadcom said in its most recent 10Q that the entire ServerWorks business may need to be repositioned, since the unit has "experienced design losses that were attributable in part to our ongoing inability to obtain required design information from a third party that is also a competitor."
The situation with SiByte is also unclear. Broadcom had positioned the 1250 processor to be a RISC-based control plane/data path hybrid device to compete with ARM and MIPS cores, while supplying on-chip packet-forwarding performance. Engineers who have left Broadcom in recent months say that the original next-generation SiByte processor program has been killed and that Broadcom has been promoting a process-shrink follow-on as a new generation of processor.
