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Broadcom Fundamental Analysis October 2023



Broadcom Fundamental Analysis.

The Company is a leading Semiconductor Innovator and Software Solutions Provider.

Broadcom is a globally recognized semiconductor designer and supplier, headquartered in San Jose, California. With a strategic focus on complex digital and mixed-signal CMOS (complementary metal oxide semiconductor) devices and analog III-V-based products, Broadcom has established itself as a prominent player in the industry.

Broadcom’s semiconductor solutions find application in various end products. Its business includes enterprise and data center networks, home connectivity, set-top boxes, broadband access, telecommunications equipment, smartphones, base stations, server and data center storage systems, industrial automation, power generation, alternative energy systems, and electronic displays.

Broadcom empowers customers to plan, develop, automate, manage, and secure applications across mainframe, distributed, mobile, and cloud platforms. Notably, the company’s cybersecurity portfolio, Symantec, comprises a wide range of security solutions encompassing endpoint, network, information, and identity security.

The strategic direction of Broadcom includes vital contributions to the Fiber Channel Storage Area Network (“FC SAN”) market. It offers critical products and complementary software solutions through modules, switches, and subsystems, featuring a host of semiconductor components.


Broadcom’s growth strategy encompasses strategic acquisitions that extend beyond the semiconductor domain. The company is proactively working to strengthen its presence in the software infrastructure sector, further broadening its market reach.


In the fiscal year 2022, Broadcom achieved substantial revenues of $33.20 billion. The company classifies its operations into two primary segments:

  1. Semiconductor Solutions. This segment, accounting for 78% of the fiscal year 2022 revenues, covers Broadcom’s semiconductor product lines and IP licensing activities.
  2. Infrastructure Software Solutions. Comprising 22% of the fiscal year 2022 revenues, this segment encompasses mainframe, BizOps, cybersecurity software solutions, and FC SAN activities.

Competitive Landscape

Broadcom operates in a highly competitive environment, facing rivals like Analog Devices, Cisco, Finisar, GlobalFoundries, Intel, Lumentum, MACOM, Marvell, Mediatek, NXP Semiconductors, Qorvo, Qualcomm, ON Semiconductor, Skyworks, Toshiba, and Texas Instruments within the semiconductor solutions market. The company continues to strive for innovation and expansion to maintain its leading position in the industry.





Semiconductor Industry: A Catalyst for Technological Advancement

The semiconductor industry plays a pivotal role as both a driver and indicator of technological progress. In this context, the Internet of Things (IoT) has emerged as a transformative force, widely recognized as the next frontier for semiconductor growth, with the potential to connect billions of devices. Broadcom, headquartered in San Jose, California, has leveraged its strong partnerships with leading original equipment manufacturers (OEMs) across various target markets. These partnerships have provided invaluable insights into customer needs, enabling the company to enhance its efficiency and productivity. Furthermore, Broadcom maintains a globally efficient supply chain, characterized by a low-cost and adaptable operational model.

Broadcom’s strategic diversification across multiple target markets minimizes operational risks and reduces vulnerability to market-specific fluctuations. Bolstered by its expanding product portfolio, the company is poised to meet the demands of rapidly evolving technologies such as IoT and 5G. We anticipate that Broadcom’s extensive range of products, catering to diverse applications within four major end markets, positions it for significant future market share expansion.

Growth through Strategic Acquisitions

Broadcom has historically relied on strategic acquisitions as a preferred approach to enter uncharted markets. Notable acquisitions include CA and Symantec’s enterprise security business, which broadened its potential market scope. The acquisition of LSI Corporation facilitated the diversification of its existing business from wired, wireless, and industrial infrastructure sectors into the storage chip market. The addition of Brocade enabled the company to further penetrate the FC SAN market while gaining a competitive edge. The pending acquisition of VMware is expected to enhance Broadcom’s presence in the hybrid cloud market.

Dividend Sustainability and Strong Cash Flow

Broadcom’s substantial cash flow generation enables it to provide consistent dividends to shareholders. The company is committed to returning fifty percent of the normalized free cash flow generated in the previous year in the form of cash dividends. In line with this strategy, Broadcom increased its quarterly dividend per common share in the first quarter of fiscal year 2023 to $4.60 per share, reflecting a noteworthy 12% sequential growth. Additionally, Broadcom reported cash flows from operations totaling $4.719 billion, along with free cash flow amounting to $4.6 billion in the third quarter of fiscal year 2023. The company’s resilient and steady cash flows lead us to believe that dividend payments are sustainable, rendering the stock particularly appealing

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