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Chipmaker Broadcom has been held back as a semi-industrial consolidator, but its ongoing diversification – with a $69 billion deal to buy software maker VMware announced today – could prove more fruitful.
Despite continued chip shortages keeping prices high, the Philadelphia SOX index of semiconductor companies is down 28 percent so far this year. The industry has boom-and-bust cycles and analysts at Bank of America say investors are currently pricing in an impending recession.
Catalysts they say could turn things around for the chip sector include an easing of lockdowns in China that have impacted supply and demand, a surge in smartphone and PC sales in the third quarter and the resilience of the Demand for data centers and enterprises.
In the latter area, Broadcom gains a broader enterprise cloud offering through its acquisition of VMware, whose software allows servers in data centers to be reconfigured as needed. It also has cybersecurity cloud service provider Symantec in its portfolio.
Broadcom’s $117 billion bid to buy its chip rival Qualcomm was blocked by the Trump administration in 2018 on national security grounds. VMware is less vulnerable to industry cycles and offers high profit margins and stable recurring revenues from its services.
Meanwhile, graphics chipmaker Nvidia suffered the same fate as its peers, reporting strong overnight results but seeing its share price fall as much as 10 percent in extended trading on fears about the future.
While Nvidia’s data center business is doing well, its gaming business is suffering. Current quarter revenue will be approximately $8.1 billion, down from analyst estimates of $8.44 billion. The reasons given were Russia’s war with Ukraine and supply chain problems in China due to lockdowns.
The Internet of (Five) Things
1. Musk needs to find more money for the Twitter deal
The billionaire trying to raise extra money to fund his $44 billion bid for Twitter after forfeiting a $6.25 billion loan commitment backed by his shares in electric carmaker Tesla. Tesla’s shares have fallen 25 percent since Musk announced plans to buy the social media platform in April. The news came after Twitter’s annual meeting, where a shareholder vote against the re-election of Silver Lakes co-CEO Egon Durban saw him submit his resignation from the board.
2. Apple’s salary increase
Apple will increase the salary for its workers to manage inflationary pressures, worker organizing efforts and increasing competitiveness in the labor market. The iPhone maker said hourly wages for US retail workers would increase to $22 an hour or more — up 45 percent from 2018. says our #techAsia newsletter the development is at least one of this year’s new iPhones default.
3. Alibaba hit by lockdowns
Alibaba warned against it that China’s Covid-19 lockdowns have hit its business, even after the e-commerce giant reported that its revenue growth had surpassed that of local rivals like Tencent and Baidu in the first quarter. CEO Daniel Zhang said the lockdowns have disrupted Alibaba’s logistics and supply chains and hit consumer demand for non-essential items, causing the company’s April revenue to fall by a low single-digit percentage year-on-year, though he said the Situation noticed had improved in May.
4. UK looks into Drahi’s BT stake
The British government should Investigate the national security implications French telecoms group Altice’s 18% stake in BT, weeks before the investment vehicle controlled by billionaire Patrick Drahi will be able to bid for the valuable national asset. Elsewhere is Economics Secretary Kwasi Kwarteng A look at a Chinese chip deal in Wales and the UK market regulator have made plans to do so Simplify listing on the London Stock Exchange to attract more fast-growing tech giants and start-ups.
5. An epic fight to keep the metaverse open
The head of Fortnite’s owner Epic tells Patrick McGee of the Financial Times of his concerns that Apple and Google could expand their control over smartphone platforms to “dominate all physical commerce that takes place in virtual and augmented reality”. In the fintech area Klarnas Chief Executive Sebastian Siemiatkowski told the FT he wasn’t convinced the buy-now-pay-later company is poised for a round of funding.
Tech tools – Dyson household robots
Dyson said this week it wants to hire 700 robotics engineers and gave an insight what they would work on. It showcased his research into robotic arms and hands – picking up toys, stacking dishes, and general tidying and cleaning in ways beyond his current vacuums. The group says its master plan is to build the UK’s largest and most advanced robotics center at Hullavington Airfield in Wiltshire and bring the technology into our homes by the end of the decade.
Broadcom broadens tech with VMware deal Source link Broadcom broadens tech with VMware deal