Broadcom has killed off its cellular baseband chip unit in a move that will lead to 2,500 job cuts or 20 percent of its total global workforce. The news is odd because Broadcom used to make a fortune from flogging its chips to Apple once. The money was so good that Broadcom decided to serve Apple instead of the growing Android market. It also missed the growing 4G market.
Backing Apple turned out to be huge mistake. While there are a lot of iPhones out there, there are a hell of a lot more Android machines and not enough Apple phones to keep Broadcom in business. The chip company has already shed 250 sales and administrative positions, according to its quarterly report filed this week. The next step is to cut 2,250 more worldwide, shutter or merge as many as 18 offices and end certain contracts.
Broadcom’s move to abandon its cellular baseband division could result in $700 million savings each year. President and Chief Executive Scott McGregor said that $50 million will be reinvested into projects involving broadband, infrastructure and whatever remains from its mobile and wireless units.
He thinks the much-hyped “Internet of things” sector, will be a place that Broadcom can move to.