Any Ramifications From Broadcom Gobbling Up Brocade?

When you see lots of merger activity in a sector, that tells you that sector is shrinking and facing hard time. Just days ago Qualcomm is buying NXP in a monster deal. And in the same week this Broadcom deal.

Now that the pie is shrinking and there’s not enough to go around, you eat the people.

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It’s the way they’re growing revenue. It is a concern that companies won’t have negotiating leverage with semiconductor companies. I think semi companies learned their lesson watching flash and DRAM get commodotized and margins killed. They don’t want that again. Less companies equals less competition and better margins.

http://www.bizjournals.com/sanjose/news/2016/11/02/marvell-slashing-nearly-17-of-jobs-selling-assets.html

Another big company in the semiconductor space cutting jobs. A big deep cut too at 17% of the workforce. Winter has definitely come to the semiconductor sector. The only way to make any money is to cut spending, aka merger.

I say the whole sector will ship out to Asia, most likely China. The fabs have mostly gone already, except Intel’s. It makes sense for the designs to go as well.

Silicon Valley is going thru a de-siliconing phase.

I “kinda” agree here. But what we’re seeing is actually a bifurcation. The companies big enough to make their own chips are in-housing chip design (google, Facebook, amazon, apple, microsoft). The merchant silicon work is moving east. I think there is a huge value add in the future for being able to do your own chips in-house. That is how folks will differentiate. It will be an arms race between the big boys as to who can build the best chips in-house, and secrets will be guarded closely.

I think it is good days for chip folks. Plus, with moore’s law running out, the only way to keep the entire party going is to customize chips for given verticals, which takes more engineers, not less. Good times ahead!

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Agree, the folks my grad school in electronics major are now in Amazon, Apple, Facebook. Who woulda thunk this? They were actually pretty stuck in their hardware roles for a while until this nee wave of hardware started coming back.

In the mainstream semi space only 5 or 6 players exist now.

I think the overall employment in US semi sector will continue to shrink. The big software companies that can afford in-house chip designs can be counted in one hand. It’s vastly different from the hardware centric days that made the name “Silicon Valley”.