Broadcom reports that the Board of Directors has approved a new share repurchase program. This program allows for the repurchase of up to 10 billion dollars in common stock through December 31, 2025.
According to CEO Hock Tan, this step reflects the Board of Directors’ confidence in Broadcom’s strength, particularly in the diversified semiconductor and infrastructure software product portfolio. He emphasized that the company occupies a unique position in mission-critical infrastructure software. And that Broadcom plays an important role in supporting hyperscalers in promoting innovation in generative artificial intelligence on their growing subscription platforms.
Value creation for shareholders
CFO Kirsten Spears added that the share buyback program reflects the Board’s confidence in the company’s strong cash flow generation and is a means of creating value for shareholders.
Purchases under this program can be made using various methods, such as open market purchases or private transactions. The timing and size of the repurchase will depend on factors such as the share price, business and market conditions, legal requirements, alternative investment opportunities, and potential acquisitions. Broadcom is not obliged to repurchase a certain number of shares, and the program can be suspended or terminated at any time.
After the announcement, the Broadcom share price rose by almost three percent in after-hours trading.
Battle for Intel’s inheritance
Broadcom was in the news earlier this year when sources reported that the company was in the running to take over parts of Intel.
This could happen via a joint venture with TSMC and possible private equity or other chip deals. The potential options vary greatly. TSMC may only take over the Foundry business (including some very expensive high-NA EUV chip machines from ASML), while Broadcom is specifically targeting the design and marketing units.
An Intel under Broadcom’s rule fires the imagination. The Register naturally turns to the notorious reputation of the American chip designer Broadcom, which operates like a private equity firm in many respects. For example, it has transformed VMware from a jumble of software solutions into a more compact, financially digestible package for better-off customers.