Avago, Broadcom merger: Symptom of a larger trend

Avago acquiring Broadcom is like a "salmon swallowing a shark," according to EE Times' Junko Yoshida. The salmon is paying $37 billion to become a single entity that's $77 billion, thereby no longer qualifying for a comparison to a salmon.

This is by far the largest merger in the semiconductor industry, according to Dale Ford, VP and chief analyst for IHS Technology. The combined revenues of the two companies in 2014 exceeds $14 billion. That makes the merged semiconductor company the sixth-largest globally.

In recent years, Avago Technologies has been busy spending to grow bigger. Last year, the company paid $309 million for PLX Technology Inc. and, before that, $6.6 billion for LSI Corp.

Avago-Broadcom will command 40% of the wired communications IC market, excluding memory, and increase its share of the wireless communications IC market to nearly 8%, ranking fourth behind Qualcomm, Samsung Electronics and MediaTek. IHS said that with an overall market share of 14% for all communications ICs, the company ranks second, behind only Qualcomm and ahead of Samsung Electronics.

Broadcom's CEO Scott McGregor seemed to confirm Avago's general aim with its acquisitions when he said during a webcast that "size and scale are becoming increasingly important" in the semiconductor industry.