The news: Broadcom is in talks to acquire cloud computing company VMware, marking a potential blockbuster deal that could help the chipmaker expand into software and services, per Bloomberg.
More on this: Broadcom and VMware are reportedly in buyout negotiations, and while a deal is not imminent, a potential acquisition would diversify Broadcom into a full-service tech firm. The move is indicative of chipmakers pivoting to cloud and edge computing. In context, AMD bought Xilinx for $49 billion in February.
The bigger picture: Acquiring VMware could help Broadcom decrease its reliance on chips, during a prolonged component shortage. By acquiring an established cloud computing player, Broadcom can diversify its business and invest in a market that is expected to reach a $750 million by 2027.
Key takeaway: Chipmakers like Broadcom are looking to diversify in anticipation of the expected slowdown once the chip shortage abates. Companies like VMware could be attractive targets for future software and cloud pivots.
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