Intel’s $2.2 billion stock offer for Level One (NASDAQ:LEVL) redraws the network chip market and validates our February dropping of Broadcom (NASDAQ:BRCM) from the ’99 HotWatch list. At that time my instinct said competition was looming large.
After losing ground since February BRCM shares rally a little today after the news and the implications come out. Keep in mind that Broadcom still enjoys the dominant market share in set-tops and DSL, however.
So calling Intel the winner in networking chips is too premature by a long shot.
Intel should have acquired Broadcom and it would have had the industry leading position in both PC and network chips.
Will someone else take out BRCM now? I can’t imagine IBM, Cisco or Motorola letting Intel own this space also. Broadcom looks like a target if these three firms have their druthers. If not then I think Broadcom must get very aggressive — a huge battle is brewing.