Broadcom Inc’s
AVGO
acquisition of
VMware, a leading cloud-computing and virtualization firm, triggers concern among Europe-based Cloud Infrastructure Service Providers of Europe (CISPE).
Subsequently, CISPE urges regulators to investigate the pricing and business model shifts introduced by Broadcom within VMware’s partnership program.
The alterations, scheduled for implementation this month, may force companies that license and resell VMware software to absorb increased costs or transfer them to customers, as per the Wall Street Journal.
The adjustments involve transitioning from perpetual licenses to a subscription model and a new billing calculation method, which Broadcom claims will provide long-term value to customers.
CISPE argues that Broadcom’s VMware, a dominant force in cloud virtualization, should be viewed as a “gatekeeper” under the European Union’s Digital Markets Act, condemning the company for imposing “take it or leave it” terms on its customers.
Francisco Mingorance, the group’s secretary general, pleads with European and national regulators to prevent the termination of existing contracts, emphasizing the significant hurdles and expenses associated with moving away from VMware.
Established in 1998, VMware has played a pivotal role in cloud computing’s advancement. Its recent acquisition by Broadcom for $69 billion resulted in notable transformations, including an overhauled software portfolio and partner network.
Earlier reports suggested KKR & Co Inc
KKR
was set to acquire Broadcom’s VMware software division for $4 billion.
Meanwhile, Broadcom is spearheading the development of technologies for the upcoming era of AI infrastructure, in response to the speedy construction of AI systems by cloud and data center providers.
These systems necessitate unparalleled performance, scale, and efficiency, driven by consumer AI applications and the requirement for custom AI accelerators that operate with minimal power consumption.
Broadcom is enhancing a comprehensive portfolio encompassing foundational technologies and intricate packaging capabilities to produce the most efficient, high-performance custom AI accelerators.
Moreover, Broadcom offers a complete range of merchant silicon connectivity solutions, covering top-grade Ethernet and PCIe to optical interconnects with essential co-packaging features for scaling AI clusters.
Broadcom’s recent innovations aim to bolster its position in custom AI accelerators, Ethernet, PCI Express, and optical interconnect portfolios, leveraging its top-tier SerDes and DSP technologies to support AI infrastructure.
Broadcom foresees $10 billion in AI chip sales in 2024. Citi analyst Christopher Danely, at a recent CEO meeting, mentioned that Broadcom views the $400 billion AI Total Addressable Market (TAM) as attainable, favoring the growth potential of custom Application-Specific Integrated Circuits (ASICs) over Graphics Processing Units (GPUs) due to their sustainability and benefits from AI advancements, with VMware acquisition projected to contribute 23% to its fiscal 2024 sales.
The stock surged over 92% last year. Investors can gain exposure to the stock through Amplify ETF Trust Amplify Cybersecurity ETF
HACK
and
Invesco Next Gen Connectivity ETF
KNCT.
Price Action: AVGO shares traded lower by 0.04% at $1,237.46 on the last check Wednesday.
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Disclaimer:
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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