Irvine-based chipmaker Broadcom Corp. last week offered some details on its plans to cut about 20% of its workforce and consolidate or close 18 locations around the world as part of a restructuring plan prompted by the wind down of its unsuccessful baseband business.
Chief Executive Scott McGregor and Chief Financial Officer Eric Brandt discussed the cost-cutting plan with analysts last week after the company reported revenue in the recently ended quarter that was in line with Wall Street estimates and adjusted profits that beat expectations.
Broadcom declined to discuss local ramifications and referred questions to an accompanying regulatory filing, which did not provide specific geographic details on the pending cuts and office closures.
“Unfortunately, we do not break the numbers out,” a company spokesperson told the Business Journal.
Broadcom currently employs about 12,500 workers overall, with nearly 2,500 at its Irvine campus next to the University of California-Irvine. The office is home to corporate personnel, including administrative, marketing, sales, legal and human resources, as well as engineers.
The restructuring follows Broadcom’s June announcement that it would exit the baseband chip business, a segment dominated by San Diego rival Qualcomm Corp.
Baseband chips are essentially the technical brains of mobile phones.
Broadcom in the last decade spent hundreds of millions of dollars on acquisitions and research and development to take on Qualcomm in baseband chips, which are more expensive and carry better margins than the chips for Bluetooth, Wi-Fi, and GPS that built Broadcom’s name in the mobile phone market.
The company aimed to build on early baseband design wins with Nokia Corp. and Samsung Electronics Co., Broadcom’s largest customer and the world’s biggest smartphone maker.
South Korea-based Samsung, which accounted for 21.3%, or roughly $1.76 billion, of Broadcom’s $8.3 billion in sales last year, uses Broadcom’s connectivity chips in its popular Android smartphones.
Broadcom is known to have a slew of chips embedded in Apple products, as well, including iPhones, MacBook Airs and iPods.
Cupertino-based Apple was Broadcom’s largest customer in 2010 and 2011 before Samsung grabbed that designation in 2012.
Apple remains a significant customer, accounting for 13.3% of Broadcom’s revenue last year, or roughly $1.1 billion.
Baseband chip sales account for a small portion of Broadcom’s annual revenue, with estimates as high as $500 million annually, but held potential as a big growth driver in the coming years as smartphone sales grow in emerging markets and consumers in the U.S. and other mature regions continually update models.
Broadcom, meanwhile, is believed to be planning a new headquarters campus at the Great Park in Irvine that could accommodate an addition of several thousand employees. The company hasn’t acknowledged a tie to the plans, and has declined comment on what lines of business or new developments might prompt new hires in the near term (see related story, page 1).
—Chris Casacchia
