Porter’s Five Forces Analysis of Broadcom
Key Facts
| Name | Broadcom |
| Industry | Semiconductors& Technology |
| Founded | 1961 |
| Headquarters | San Jose, California in USA |
| CEOs | Hock E. Tan |
| Revenues | $ 28.5 billion,2022 |
| Profit | $ 7.8 billion, 2022 |
| Competitors | Intel, Texas Instruments ,Oracle , Taiwan Semiconductor Manufacturing , Micron Technology, Cisco |
Company Overview
Broadcom, Inc. is a multinational technology firm that designs, develops, and distributes semiconductor and infrastructure software.Broadcom serves customers worldwide. In 2022, it received US$28.5 billion in revenue with growth of 21% year-over-year. The profit was earned of US$7.8 billion in 2022. Broadcom’s assets are valued at $73.2 billion for the year 2022. Broadcom was created in 1961 and is based in San Jose, California.
Porter’s Five Forces Analysis
Below is the Porter’s Five Forces Analysis which is widely referred by business managers and business researchers throughout industry and academics to have a better, informed and strategized decision:
Broadcom Rivalry among Existing Competitor
- Broadcom Business Segments: Broadcom is a Fortune 500 semiconductor newcomer that operates in four segments of wired infrastructure, wireless communications, corporate storage, and industrial and licensing. The department which manages the transfer of data in the data center is the Semiconductor Solutions Division. It is also manages the telecommunications, enterprise and networking applications.. Infrastructure Software provides products for mainframe, corporate, and storage area networking. The intellectual property licensing segment licenses a portion of the company’s broad intellectual property portfolio.
- Broadcom Global Operations Year 2021: Bloomberg reported that Apple is Broadcom’s largest customer, contributing for around 20% of the chipmaker’s revenue in the previous year 2021, totaling almost $7 billion. Broadcom’s annual revenue for 2021 was $27.45 billion, rise of 14.91% from 2020.
- Taiwan Semiconductor Manufacturing:Taiwan Semiconductor Manufacturing Co., Ltd. produces and sells integrated circuits and wafer semiconductor devices.Taiwan Semiconductor has 65,152 employees. It earned $61.5 billion in revenue and $23.6 billion in profit in 2022.It has assets of $139.4 billion. Chung Mou Chang created the enterprise on February 21, 1987, and it is headquartered in Hsinchu, Taiwan.
- Intel:Intel Corp. creates, manufactures computer devices and technology. The Company Intel provides a base and platform for computers and networking .It has further services in the category of datastorage and communications. Intel earned $79 billion in revenue and $19.9 billion in profits in 2022. It has assets of $168.4 billion. On July 18, 1968, Robert Norton Noyce and Gordon Earle Moore formed the company, which is located in Santa Clara, California.
- Oracle:Oracle Corp. provides solutions and services that includes business information technology environments.The Oracle Company operates in the business divisions of Cloud and License, Hardware and Services.The Oracle Company also provides consulting for Oracle works, advanced support, and education services in the category of Services. In 2022, it generated $41.8 billion in revenue and $7.6 billion in earnings. It has assets of $108.6 billion. Lawrence Joseph Ellison, Robert Nimrod Miner, and Edward A. Oates started the corporation on June 16, 1977, and it is located in Redwood City, California.
- Investment in Research & Development-Marketing Cost and Brand Image:Due to various technical advancements, devices and software require updated versions of hardware. Broadcom has constantly contributed to the growth of products and services over the years to create a seamless technological experience.
Broadcom Threat of New Entrants
- Global Semiconductor and technology Industry:In 2022, global semiconductor revenues total was 580.13 billion US dollars. Semiconductors are important components of electrical gadgets, and the industry is fiercely competitive. In 2022, the year-on-year growth rate was 4.4 percent.
- High Capital Investment- Trained Human Resources: Broadcom demonstrates the innovation necessary to make semi-conductors. The corporation promotes employee trainings and collaborative effort for efficiency, as evidenced by their continued business growth.
- High Research & Development Cost: Broadcom spent around 4.92 billion US dollars on research & development in year 2022. The increase in spending is of 1.34% from previous fiscal year when 4.85 billion US dollars were invested.
- Technological Advancement: Broadcom provides full solutions for cable, satellite, Internet, and terrestrial Set-Top Box Solutions. These products provides a support base for global service providers to introduce advance efficient technologies and services. These services include transcoding services, digital video recording with functionalities, high definition video processing. Also with increased networking capacity with more tuners for faster channel switching and simultaneous recordings.
Broadcom Bargaining Power of Suppliers
- Supplies Industry Influencer: The semiconductor giant creates and sells semiconductors as well as infrastructure software to the wireless and broadband communication sectors. It has suppliers located across Asia, Europe and USA. According to the company executives during COVID-19, Broadcom was able to “have done a very good job of balancing demand and supply in its end markets.”This belief that Broadcom began managing its supply chain well ahead of its peers and has secured a better sourcing position with suppliers is shared by analysts at JPMorgan (JPM), who believe that the company’s strong bookings and backlog are reflective of the considerable demand, and supply-chain managementthat supports revenue growth in the fiscal year.
- Suppliers Collaboration: Broadcom offers a wider portfolio of diverse range of Fiber Optic components to the Ethernet networking with storage and access and telecommunications sector. These optical components enable high-speed data transmission through optical fibers. Broadcom is highly focused on upcoming 5G technology and supply of wireless items. The semi-conductor and chip manufacturers need to overcome the obstacles of building high-speed radio networking as the 5G industry expands.
Broadcom Bargaining Power of Buyers
- High Product Differentiation: In this category the production differentiation is high the companies provides the services for the updatation, optimization and protection of the highly complex hybrid systems. The company further provides storage adapters, controllers, networking processors, motion control encoders, and optical sensors. Also the infrastructure and security softwares for the buyers.
- Customer Satisfaction – After Sales Services: Broadcom’s clients include Apple, Cisco, Dell AT&T/Bell Labs, Lucent, and Hewlett-Packard/Agilent, that are main players in the technology sector. The company provides innovation in the products to ensure the maximum supply of parts for the manufacturing process of their clients.
- Government Rules & Regulations: Broadcom recognized the significance of complying with USA government laws and standards for business activities in their corporate code of conduct.
Broadcom Threat of Substitute Products or Services
- Semi-conductors:The Semiconductor Sector Association (SIA) reported that worldwide semiconductor industry sales reached $573.5 billion in 2022, the highest-ever yearly total and a 3.2% rise over the $555.9 billion total in 2021. KPMG estimates more than 10% semi-conductor industry growth in the following year.
- Brand Loyalty: Broadcom has always striven to make its clients’ operations more efficient by improving their business processes, products, and services. As a result, their consistent company success may be attributed to their devoted clients and customers, who have acquired access to numerous digital prospects through Broadcom.
- Post-COVID 19 Market: Broadcom’s worldwide semiconductor market share in 2022 was 4%, part of a market that earned 601.69 billion US dollars in earnings that year. Broadcom’s semiconductor sales increased by 26.7 percent in 2022 over 2021, while the total market increased by only one percent.
References
- Forbes, Profile, Broadcom
- Forbes, Profile, Taiwan Semiconductor
- Forbes, Profile, Intel
- Forbes, Profile, Oracle
- Bloomberg the Company & Its Products, Broadcom Inc. Available at Bloomberg
- Statista (December 2022) Research and development expenses of Broadcom from 2017 to 2022(in billion U.S. dollars)| Statista. Availableat.Statista
- Statista (January 2023) Broadcom semiconductor market revenue share worldwide from 2010 to 2022| Statista. Availableat.Statista.
- Statista (November 2022) Semiconductor market size worldwide from 1987 to 2023(in billion U.S. dollars| Statista. Availableat Statista
- Fortune 500 Rankings. Available atFortune
- Broadcom Inc. – About Us. Available at Broadcom
- Broadcom Inc. – 2022 Annual Report. Available at Broadcom