Why Apple Should Buy Broadcom’s Baseband/Modem Business

As I reviewed Broadcom’s updated SoC and modem business/strategy a few months ago, I became increasingly optimistic with their opportunity in this space. I understood the challenges of growing this business and the internal commitment it would require but still felt there was reason for optimism. Due to the upside I felt Broadcom had, it was a bit surprising they announced their intention to sell it. Broadcom must have come to the conclusion the resources and commitment neeed to grow this segment was more risk than they were willling to take at the moment. Resources poured into this are resources taken away from their other businesses. Broadcom is focusing on their core and this should be viewed as wise, but also conservative, on the part of their management.

What will happen with Broadcom’s baseband assets? I believe Apple is the perfect acquirer. One of my key takeaways from my meeting with Broadcom was they had some IP around their standalone thin modem which would be attractive to Apple as an alternative to Qualcomm. Doing so gives them technical flexibility and the ability to cut costs as well. The point remains for Apple, integrating a modem onto their SoC is the logical next step for the A-series. Getting modem IP, and the patents to globally certify that modem, is not something Apple can grow in-house. Which means at some point in time it will be necessary for them to get this IP from somewhere. Not many companies have these assets let alone are willing to sell them. Apple could license the IP to do this but knowing Apple like I do, they would much rather own this technology than license it. However, the IP alone may not be the driving reason for Apple to buy this group from Broadcom. It may very well be the engineering talent Apple wants and needs.

Broadcom acquired the team and IP from Renessas who acquired the team and the IP from Nokia. Most of the engineering team from Nokia remains intact and is regarded as one of the best communication engineering groups around. This is extremely significant for Apple. I view Apple’s potential to acquire Broadcom’s baseband group similar to the acquisition of PA Semi — more about the talent of the architects than the IP portfolio itself.

As Apple drives down the road of Moore’s law, they will increasingly have more transistor budget at their disposal. I strongly believe Apple’s architecual prowess of their A-series SoCs is one of the most underlooked areas of competitive advantage Apple has. They are in the unique position to spend their transitor budget in ways specific to the Apple experience. They can uniquely tune the SoC to the hardware, to the software, and potentially to the cloud services in the future.

Like all SoC companies going forward, the onus is on the architects not the architecture. In this light, it makes sense for Apple to have outstanding engineers when it comes to the communication bits as they look to inevitably integrate those bits onto their SoC.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

3 thoughts on “Why Apple Should Buy Broadcom’s Baseband/Modem Business”

  1. I agree that Apple should be (and probably is) integrating a baseband modem in their SoC. If they don’t already have a baseband team, then buying the Broadcom team is a good option. But they may already have a team (I would be surprised if they have gotten this far without assembling one) and they may have all the patents they need from the Nortel patent auction.

  2. even before the team up with ibm i saw apple becoming blackberry were other than business they were known for efficient data use

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