Broadcom, which more than doubled its staff last year, plans to do so again in 2000, chief technical officer Henry Samueli said in an interview.
"We're looking to double again," said Samueli, who was in San Francisco for a conference of CTOs. "We're going to have to find more companies (to acquire)."
Last year, the Irvine, Calif.-based company acquired five businesses: HotHaus, AltoCom, Maverick Networks, Epigram and Armedia. Already this year, Broadcom has acquired BlueSteel Networks, a maker of network security processors, and Digital Furnace, a maker of software that boosts the capacity of existing networks to allow more interactive services.
The company also said in March that it will acquire 3D graphics firm Stellar Semiconductor.
The need to grow through acquisition is driven by intense competition in each of Broadcom's market segments. Nearby Conexant Systems, a spin-off of Rockwell International, is looking to go after Broadcom in the cable modem market, as is Texas Instruments, which last year acquired Israel's Libit Signal Processing. In copper-wire networking Broadcom competes with, among others, Intel, which last year bought Level One Communications.
Broadcom has expanded its business units, last month adding a division focused on chips for optical networking. The company was already a leader in chips for copper-wire networking, cable set-top boxes, home networking and cable modems and has offerings in the broadband wireless and digital subscriber line (DSL) markets.
Business in each of those areas is expanding at or ahead of plans, Samueli said. Broadcom's quarterly sales have been roughly double those of the previous year in recent quarters. In the first quarter, Broadcom had sales of $191.3 million, up 91 percent from last year's first quarter.
"Every market it seems we're in, our market share has continued to grow," Samueli said. In some markets, such as cable modems and set-top boxes, Broadcom already had a commanding share and had expected it would lose share over time as new players entered the markets.
Analysts generally lauded Broadcom's ambition.
"I think Broadcom will succeed in practically any market they enter," said Chase H&Q analyst Lauren Landfield.
Landfield noted that Broadcom entered the crowded copper-wire networking business only a few years back and has built a 60 percent market share with its offerings. But he cautioned that the optical market is different, with longer design cycles that allow existing players to reap benefits from 4-year-old design innovations.
"I don't think you'll see meaningful volumes for probably a couple years," he said.
Meanwhile, as Broadcom grows, Samueli is faced with the mounting challenge of making sure the company's 700 engineers are on track as the search for more workers continues. And the situation won't improve over time, he said.
at a glance
HQ: Irvine, California
CEO: Henry T. Nicholas III
Annual sales: $518.18
Annual income: $83.29
Date of IPO: April 1998
Source: Bloomberg 5/18/99
The battle for talent has led some of Broadcom's competitors to take legal action over the company's tactics.
Most recently, Intel cried foul. The company filed a lawsuit in March seeking an injunction to prevent former Intel workers from taking positions at Broadcom, where they would be forced to divulge Intel trade secrets.
According to Intel, a judge has granted a temporary restraining order on Intel's behalf, and a hearing is under way on Intel's request for a preliminary injunction.
Samueli said that area of law is becoming more complex. The typical remedy of forcing an employee not to work in the same area for a particular period of time doesn't work when the industry changes so fast.
"They could be obsolete in a year and a half," he said. The distinction needs to be made, he said, between a worker's general skills, such as chip designing, and what is a specific trade secret.
"That should be protected and is protected," Samueli said.
Samueli, who co-founded Broadcom in 1991 with Henry Nicholas, has helped make the company one of the fastest-growing chipmakers ever, in terms of both sales and market capitalization.
Broadcom shares are trading at more than 25 times the offering price when the stock went public in April 1998. The rise has made Nicholas and Samueli among the richest Americans. However, Samueli said that neither he nor other Broadcom workers really have time to enjoy their wealth.
"Now is not the time," Samueli said.