Broadcom Seeks More Phone Customers in Showdown With Qualcomm

Broadcom Corp. (BRCM) plans to increase the speed of its mobile-phone processors in a new push to expand its customer base beyond Nokia Oyj and Samsung Electronics Co.

Broadcom had previously turned down requests to make processors for other customers because it wanted to focus on those two companies, Chief Executive Officer Scott McGregor said today in an interview. Now Broadcom is ready to devote resources to adding new customers and improving its chips, he said.

The effort would lessen the risk of relying mainly on Nokia and Samsung, the world’s largest phone manufacturers. Nokia has lost market share in recent years to Apple Inc. (AAPL)’s iPhone and devices that run Google Inc.’s Android software. Samsung, meanwhile, faces risks from patent litigation.

“Nokia and Samsung are great, but we want to diversify the customer base so we don’t have as much headline risk when any one of them missteps,” McGregor said. That will entail improving the chips, known as application processors, he said. Broadcom needs to “up our game on applications processors so there’s no excuse there.”

The campaign for customers sets up a showdown with Qualcomm Inc. (QCOM), the top supplier of mobile-phone chips. Both companies aim to capitalize on booming demand for Internet-connected smartphones, which require more sophisticated processors.

While Texas Instruments Inc. (TXN), Nvidia Corp. and Intel Corp. also target the market, Broadcom and Qualcomm are the only companies that supply a full range of chips, McGregor said. Broadcom plans to devote enough resources to new customers and may allot as many as 100 engineers to each one, he said.

‘Two-Horse Race’

“It’s going to be a two-horse race: us and Qualcomm,” McGregor said. “People are receptive to Broadcom because we provide a complete solution.”

Broadcom, based in Irvine, California, rose 17 cents to $33.35 today in Nasdaq Stock Market trading. The shares have climbed 4.8 percent in the past year.

In addition to selling phone processors, Broadcom supplies other types of communications chips for products such as the iPhone and iPad. San Diego-based Qualcomm, meanwhile, dominates the market for radio chips -- the components that let phones connect to carrier networks. Qualcomm has displaced Texas Instruments in the phone market in recent years. Texas Instruments is backing away from radio chips so it can focus on other kinds of components.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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