VMware, cloud computing software led by current Intel CEO Pat Gelsinger until a few years ago, is the next acquisition target for Broadcom, known as a high-profit company in the semiconductor industry. At the beginning, there seems to be another offer to bring Broadcom to the software side of the fast-growing data center business.

This is Broadcom’s third major acquisition of a software company; it bought CA Technologies for $ 18.9 billion in 2018 and Symantec’s security division for $ 10.7 billion in 2019. Last year, the chipmaker also came close to buying analytics developer SAS Institute. The VMware deal marks Broadcom’s next foray into enterprise software.

VMware, which spun off from Dell Technologies in November 2021, is developing virtualization software to make calculations more efficient; it offers a range of software products for the hybrid cloud market. On the other hand, Broadcom focuses its silicon offerings on connectivity, security and critical operations. And that fits in well with VMware’s multi-cloud strategy.

What these two companies have in common is that they are both beneficiaries of the exploding data center market. Broadcom is currently worth $ 222 billion, while VMware has a market value of nearly $ 40 billion. However, according to industry reports, the deal could be worth $ 50 billion, potentially making Broadcom a more diversified technology giant.

It is not yet clear how Broadcom actually plans to create a synergy between its semiconductor business and VMware’s software offerings. In addition, the terms of the deal are still unknown, and according to some industry sources, negotiations between the two companies are ongoing and the deal is not inevitable.

According to some industry observers, this could spark a bidding war in the coming days. In addition, it could potentially increase the share price of VMware, which has recently fallen.

Majid Ahmad, editor-in-chief of EDN and Planet Analog, has covered the electronics design industry for more than two decades.

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