Broadcom under antitrust scrutiny over data center chips

02 Apr 2020 12:47 pm by Joshua Sisco

Semiconductor company Broadcom is under scrutiny at the US Federal Trade Commission for potential anticompetitive conduct related to semiconductors used in data centers, MLex has learned.

FTC lawyers made a round of calls to third parties, including customers and competitors of Broadcom, in mid-February, but the agency has been investigating the conduct for longer, it is understood.

The FTC's calls in February are part of a preliminary inquiry and were focused in part on whether Broadcom has abused its dominant position as a supplier of chips used in ethernet switches for data centers.

The FTC is understood to be examining how Broadcom bundles its various semiconductors and other products.

Broadcom has been under FTC scrutiny for at least the past two years for potentially anticompetitive bundling, rebates and other conduct, but the inquiry relating to data center chips is understood to have begun recently.

Broadcom is also under investigation by the European Commission for rebates on other chips. In that probe, the commission is investigating whether the company distorted the market by using illegal rebates for chips used in set-top boxes for audiovisual content and those used in fiber, cable and xDSL modems.

Broadcom’s products primarily relate to four markets: wired infrastructure, wireless communications, enterprise storage and other industrial uses.

In the US, the FTC is also investigating Broadcom over supplies of components used to make hard disk drives, it is understood. That investigation has been percolating at the agency since 2017 and stems in part from a complaint by Western Digital.

In a 2017 letter, Western Digital complained to Toshiba about Broadcom's sales practices. The letter was sent during a dispute between Western Digital and Toshiba over the sale of Toshiba's stake in their flash memory joint venture. Western Digital was trying to discourage Toshiba's sale of its stake to Broadcom.

In the letter — filed as part of a lawsuit between Western Digital and Toshiba — Western Digital called Broadcom "a difficult and untrustworthy business partner." Western Digital said Broadcom cut off supply of hard-disk drive preamplifiers when it learned Western Digital was seeking additional suppliers. Broadcom's actions "raise serious antitrust concerns," Western Digital wrote in the letter.

Broadcom isn't the only semiconductor company under investigation by antitrust authorities. Taiwan Semiconductor Manufacturing Company, which fabricates chips on behalf of Broadcom and others, is also being probed by the FTC and European Commission.

A spokesperson for Broadcom declined to comment. A spokesperson for the FTC declined to comment.

— Additional reporting by Leah Nylen

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