Broadcom Ltd.’s operation in Irvine is likely to shed more employees after the chipmaker sold its Internet of Things business last week for $550 million to Cypress Semiconductor Corp. in San Jose.
The cash buy includes Broadcom’s Wi-Fi, Bluetooth and Zigbee IoT product lines and intellectual property, plus its WICED Smart chipsets, which allow devices to talk to each other.
The IoT business and WICED brand, which have been around for a few years, were based at the company’s University Research Park campus and employed about 430 worldwide.
Broadcom Ltd., which was established in February after Avago Technologies Inc. acquired Irvine-based chipmaker Broadcom Corp. for $37 billion, declined to respond to inquiries regarding local impact.
“Broadcom has no comment beyond the news release,” a spokesperson told the Business Journal.
The company, which is based in Singapore and has its U.S. headquarters in San Jose, has slashed about 700 employees in Irvine since the transaction closed in February. The layoffs were part of a nationwide cost-cutting plan directed by Chief Executive Hock Tan.
The Irvine campus has lost about 29% of its work force, according to filings with the California Employment Development Department and Business Journal research. The company entered the year as OC’s 34th largest employer, with 2,400 local workers.
The Business Journal reported that Tan cleared out nearly the entire management team at Broadcom Corp. after the sale closed.
Broadcom co-founder Henry Samueli retained his post as chief technology officer and maintains a board seat at the combined company, which is the world’s third largest chipmaker, with annual sales of about $15 billion.
Tan has been lauded on Wall Street for trimming acquired companies and unloading noncore business lines in an ongoing roll-up strategy. He sold LSI Corp.’s networking division to Intel Corp. for $650 million after buying the San Jose-based chip and software maker in 2014 for $6.6 billion in a move that brought a leadership position in enterprise storage.
Avago—days after closing its $660 million acquisition of Emulex Corp. in May of that year—cut 49 workers at the Costa Mesa headquarters and another 39 at the networking gear maker’s San Jose operations, roughly 8% of the company’s work force.
It put Emulex’ headquarters at 3333 S. Susan St. up for sale. The campus, which included about 180,000 square feet spread over three buildings and 3.2 acres of adjacent land, fetched nearly $50 million in a sale to Foster City-based investor and developer SteelWave.
The Business Journal recently reported that Broadcom plans to sell one or more of the four midrise buildings at its new campus under construction at a 73-acre site at Great Park Neighborhoods that sits on the southern edge of the former El Toro Marine base.
Broadcom’s IoT unit was a relatively new business venture aimed at complementing the company’s position as a leading supplier of connectivity chips to the world’s largest consumer electronics brands, such as Apple Inc. and Samsung Electronics Co., its two largest customers.
The newer customer base was largely comprised of hot startups and emerging companies. The roster, ranging from makers of portable breathalyzers and wireless grilling thermometers to manufacturers of mini drones and smart guitars, presented an opportunity to gain a firm foothold as a supplier for a wide range of products, in hopes that some of them would hit it big.
“We’re really just helping to create an overall innovation wave that I don’t think we’ve seen,” Broadcom Chief Executive Scott McGregor told the Business Journal about a year ago at the groundbreaking of the company’s new campus.
McGregor left the company after the sale and received a $67 million severance package.
Tan didn’t hold the same view as McGregor on the booming IoT market, which according to Massachusetts-based market researcher International Data Corp. is projected to hit $7.1 trillion in global sales for components and related equipment by 2020.
Morgan Stanley estimates that about 75 billion products, such as washing machines, lighting systems and body health sensors, will be connected to the Internet by then.
The Consumer Technology Association estimates that the segment will fuel consumer electronics sales to a record $287 billion this year. Big catalysts include wearables, virtual reality and drones, the Arlington, Va.-based trade group said.
Broadcom’s IoT business unit generated $189 million in the past 12 months. The company has provided chips to power more than 1,500 products since the 2011 launch of its WICED Smart brand, including devices from the likes of Apple, Home Depot, Honeywell and Nest.
The chipmaker said it will continue to focus resources on wireless connectivity in non-IoT related segments, such as set-top boxes, infrastructure, smartphones and laptops.
The divestiture, which was approved by the boards of Broadcom and Cypress, is expected to close by October.
