Following Broadcom's acquisition of VMware, there has been significant interest in how the two companies will evolve and whether the merger will generate any notable synergy for the broader group.
Initially, VMware appeared to operate independently from Broadcom's semiconductor business, suggesting that any potential synergy may take time to manifest. For now, it seems that Broadcom has simply added another profit engine to its portfolio, without directly benefiting its hardware division.
Acquisition for technology
In recent years, many chip manufacturers have been expanding into systems development. For example, Nvidia has ventured into server development, and AMD acquired ZT Systems to enhance its system design capabilities. Even non-cloud IC design companies, like Qualcomm and Broadcom, are moving towards system-level designs.
However, Broadcom's strategy seems unique. Its acquisition of software companies, including VMware, does not appear to be aimed at enhancing its chip design competitiveness but rather at broadening its business scope. Acquiring VMware represents a key step in expanding Broadcom's software business, centered around integrating various technological capabilities, without involving the hardware side.
From VMware's perspective, Broadcom has played a significant role in helping the company streamline its operations, offering essential technical support. Overall, the assistance has been more operational than product-oriented.
VMware has emphasized that Broadcom's recent software acquisitions maintain a high degree of operational independence, ensuring close collaboration with a wide range of customers.
VMware's software runs on nearly every chip platform, regardless of whether those platforms compete with Broadcom's chips. VMware remains open to all relevant collaborations.
A comprehensive package
Currently, the focus across the company's divisions is cloud-based AI. Broadcom's networking chips and ASICs dominate the cloud AI market, while VMware continues to maintain strong competitiveness in the virtual cloud market, accelerating the adoption of AI privatization technologies.
Despite AI being a significant focus, the primary synergy from the merger seems to be the ability to offer customers a comprehensive package of hardware and software services. However, there appears to be little opportunity for deeper integration on a technical level, unlike Nvidia's strategy with CUDA, which ties customers to its chips.
VMware's market performance could improve further after completing its internal restructuring, but these gains would be challenging to attribute solely to the merger. Whether the partnership will evolve into new collaboration models that generate more pronounced synergies remains to be seen.
