Broadcom’s (AVGO) newly acquired software business will give it stable revenue under the Infrastructure Software segment. The company’s traditional hardware business will be reported under its Semiconductor Solutions segment, which will contribute ~80% to its revenue.
The Semiconductor Solutions segment will include Broadcom’s earlier business segments: Wired Infrastructure, Wireless Communications, Enterprise Storage, and Industrial and Other.
The Wired Infrastructure business offers set-top boxes, broadband access gateways, and network infrastructure components for data center, telecommunications, and embedded technologies. Event after CA Technologies’ acquisition, the Wired business will remain Broadcom’s largest business, contributing 35% to its revenue. It’s the company’s slowest-growing business, but it generates stable revenue. In fiscal 2018, Broadcom’s Wired revenue rose 1% YoY (year-over-year) to $8.68 billion.
Growth will likely pick up in the Wired business when 5G deployment picks up in the latter half of 2019, increasing the demand for network infrastructure products.
Broadcom’s second-largest business, Wireless, offers wireless connectivity components largely for smartphones. The business’s key customer is Apple (AAPL), from which it earns more than 80% of its revenue. The Wired business has been one of Broadcom’s fastest-growing businesses, as it’s benefited from higher iPhone unit sales and increasing semiconductor content per phone.
However, the Wired business’s revenue fell 5% YoY (year-over-year) in the fourth quarter of fiscal 2018 as demand for Apple’s iPhones fell. Broadcom is now looking to diversify its smartphone customer base to other premium and mid-tier handsets. Its Wi-Fi 6–capable chip, BCM43752, will feature in Samsung’s (SSNLF) flagship Galaxy S10 series. It has also announced a BCM43752 Wi-Fi 6 chip for the mass market. The Wireless business’s growth will accelerate once the adoption of 5G phones picks up, as many customers will likely upgrade their phones, and semiconductor content per phone will increase.
Next, we’ll look at Broadcom’s Enterprise Storage and Industrial and Other businesses.