Less than a week after the acquisition, the chip giant started a massive layoff: more than 20,000 people may eventually be laid off

Since Broadcom announced its plan to acquire VMware in May last year, due to the huge amount involved, the biggest uncertainty in the acquisition has been the approval of various countries. In March 2023, VMware warned investors that different legal provisions in China and the United States could lead to legal conflicts. The company said China's laws and regulations on data storage and processing could affect its business.

On November 21, the State Administration for Market Regulation issued an announcement approving the antitrust review decision of Broadcom’s acquisition of VMware’s equity with additional restrictive conditions, marking that the acquisition has finally come to an end.

Surprisingly, just after acquiring VMware, Broadcom has not yet warmed up to it, and then started a large-scale layoff mode, allowing the world to once again see the "cold-blooded", "decisive" and "decision" of large companies. 

Fu Bin｜Author

Electronic Engineering World (ID: EEworldbbs)｜Produced by

The scale of layoffs is far greater than imagined

Since last week, the scope of Broadcom's layoffs has continued to expand. As more news is disclosed, Broadcom's ultimate goal is gradually revealed.

On November 22, Broadcom's acquisition of VMware was finally settled, and four departments were quickly established. At the same time, VMware CEO Raghu Raghuram resigned. At that time, he confirmed that layoffs were inevitable.

He wrote: "Whether you join Broadcom or start a new chapter elsewhere, I sincerely wish everyone the best and hope that everyone can make a positive impact on the world."

On November 27, media reports indicated that some VMware employees were informed that their positions would be eliminated.

The email stated: "Broadcom recently completed its acquisition of VMware. As part of the integration plan and following an organizational needs assessment, we identified the roles required in the combined company moving forward. We regret to inform you that your position will be is terminated, your employment will be terminated. We would like to thank you for your dedication and service and we want to make this transition as smooth as possible, including providing you with a generous severance package and providing you with a period of paid time away from work. notice period."

At that time, an anonymous VMware employee said Broadcom would offer existing employees two options: a new contract or severance packages. At the time, it was unclear how many VMware employees would be affected by the layoffs. At the same time, Broadcom was also evaluating strategic options for VMware's End-User Computing and Carbon Black divisions.

On December 1, foreign media reported that Broadcom headquarters would lay off 1,267 VMware employees.

Broadcom said in a filing with the California Employment Development Department that the layoffs will begin on January 26, 2024, affecting approximately 1,267 positions at VMware's Palo Alto headquarters.

Some VMware employees expressed concerns about a culture clash with Broadcom, especially since Broadcom's CEO once said, "teleworking does not exist at Broadcom." The employees also said some deals have slowed down as customers await news about VMware's fate. .

An employee of VMware China revealed that the company's private cloud business is facing fierce competition from local companies. These companies are seeking to use domestic products to replace foreign products, and VMware's Beijing branch is already undergoing trademark replacement and personnel adjustments. At the same time, Broadcom has renovated offices in many regions, but more than 1,000 employees in China are still waiting for more news about their departure and retention, and some people will face job changes.

On the afternoon of December 1, foreign media reported that the official number of layoffs had risen to 2,838. The data comes from WARN (Worker Adjustment and Retraining Notification) notices submitted by Broadcom in multiple states in the United States.

U.S. labor law requires companies to provide 60 days’ notice in states that are closing factories or laying off large-scale layoffs. Broadcom has submitted a layoff notification (WARN) to the California Employment Development Department (EDD). However, these numbers may not be complete at this time because U.S. state WARN regulations generally only require companies to file if 100 or more employees are affected.

In addition, the layoffs will be carried out in batches, starting on January 26, 2024, and will be continued on February 2, March 1, April 26 and May 24, 2024.

Specifically, Broadcom will lay off 1,267 people at its VMware headquarters in Palo Alto, California, 158 in Washington state, 169 in New York, 217 in Georgia, 184 in Colorado, and Texas. , Virginia and Massachusetts will lay off 843 people, these numbers add up to 2,838 people.

Of course, this is not the scariest thing. VMware insiders say that the final total number of layoffs may reach 10,000 to 20,000. Many layoffs are staggered and last as long as nine months. In other words, for nearly a year, VMware employees have been on tenterhooks.

What is the concept of such layoffs? By comparison, as of February this year, VMware had more than 38,000 employees. Before VMware was acquired by Broadcom, it had already started layoff mode. In September, VMware sent a letter to employees saying Broadcom would offer them a job or a transitional position or receive a severance package.

He is an acquisition maniac and a cold-blooded businessman.

Why is Broadcom getting stronger and stronger? On the one hand, because it will continue to make acquisitions, it is very keen on spending large sums to acquire companies to make up for its shortcomings and diversify its development in the enterprise software field in the future; on the other hand, it is very good at reorganizing and selling off non-core products. business and layoffs to improve their profit margins.

This time, the goal of acquiring VMware is to make up for its shortcomings in software, and software is an aspect that Broadcom has focused on in recent years. For example, in 2018, it acquired the US business software company CA Technologies for US$18.9 billion; in 2019, it acquired Symantec's enterprise security business for US$10.7 billion; in July 2021, Broadcom Negotiations were made to acquire software company SAS, with a valuation of US$15 to US$20 billion. After the news of the acquisition was made public, the negotiations broke down.

Incomplete statistics on Broadcom’s acquisition history, source | Guosheng Securities

Broadcom's "cold-bloodedness", "decisiveness" and "resoluteness" did not last just a day or two. As early as 2005, Agilent Technologies' semiconductor division was acquired by three capital companies for US$2.66 billion. When it became independent as Avago, it cut half of its workforce to reduce costs and improve operating efficiency; and later, on May 28, 2015 , Avago announced the acquisition of semiconductor company Broadcom for US$37 billion and established it as the new Broadcom Limited.

For another example, after acquiring LSI, Broadcom immediately sold LSI's enterprise flash memory and SSD controller business to Seagate; after acquiring the original Broadcom, it immediately sold its IoT business unit for US$550 million; after acquiring Brocade, it sold Brocade's data center assets to Ji Into the network, priced at $5,500, Extreme took over Brocade's data center routing, switching and analysis business, while Brocade's Ruckus wireless and ICX switch business was sold to Arris for $800 million.

Foreign media reports wrote: “Broadcom CEO Tan Hock Eeng (also known as Hock Tan)’s strategy is to identify companies with strong market shares but poor growth prospects, which increases profits and wins investor support. After acquiring these companies, Hock Tan immediately integrated the business, screened out core engineering personnel, and laid off employees to cut costs. "Although the methods are very "ruthless", it has to be said that this so-called "ruthless man" Hock Tan, it is this that leads Broadcom to grow.

VMware's core business is an extremely sticky product that will take years for people to migrate and recoup costs, but the company doesn't have much growth potential. Broadcom's ultimate goal must be to cut expenses to almost zero and make full use of the long-tail effect of revenue.

Of course, VMware employees are not completely unaware of the layoffs. In fact, many employees have already known about the layoffs a year ago, and many may have changed jobs or prayed that they would be the one who was fired.

Broadcom’s ultimate goal is AI?

For chip giants in the wave of AI, "soft power" has become the key to today's competition.

For example, in the second half of this year, AMD has completed the acquisition of two AI software companies, Mipsology and Nod.ai. At the same time, AMD still has more potential prey in its mind.

For another example, in March this year, NVIDIA launched four inference platforms in one go, all of which were specifically optimized for generative AI. This also shows that NVIDIA is willing to devote more resources to its internal R&D team.

The anchor points of these giants point to AI. The same is true for Broadcom.

Broadcom has always been known as the "hidden player behind AI." The 2023Q2 financial report shows that Broadcom’s chip revenue has exceeded expected growth, and the main growth force comes from AI. In the next fiscal year, Broadcom's AI-related chip business is expected to double to US$7 billion, becoming the world's second-largest AI chip company after Nvidia.

In fact, in the 18 months since the acquisition, Broadcom and VMware have never stopped preparing for war on AI. For example, Broadcom's PCle Switch chip can interconnect CPUs, GPUs and other components to build AI servers; Broadcom has launched a 112Gbps deserializer and retimer to support AI network-scale deployment and network component connection; VMware cooperates with Nvidia Launch private AI infrastructure.