In a landmark development, Broadcom, the US semiconductor giant, has moved one step closer to acquiring virtualization technology developer VMware in a monumental $61 billion deal. After months of intense antitrust scrutiny, the European Union regulator has finally given its approval, albeit with certain requirements to ensure healthy competition in the industry.

Broadcom initially announced its intention to purchase VMware in May 2022, with the deal expected to close in fiscal 2023. The staggering $61 billion transaction will be financed by Broadcom through a combination of cash and its own stock, split evenly between the two. While this deal falls slightly behind record-breaking acquisitions such as Dell and EMC ($67 billion) and the ongoing Microsoft/Activision Blizzard ($68.7 billion) merger, it remains one of the most significant deals in the tech industry.

Returning to the Broadcom and VMware agreement, the European Commission’s investigation concluded that Broadcom’s dominant market position had limited potential for abuse. To ensure the preservation of healthy competition, the regulator imposed certain conditions. It was determined that Broadcom did not possess a “strong position” capable of hindering competition in the networking and storage market. Moreover, it was found that Broadcom had no vested interest in restricting cooperation with AMD and NVIDIA in any manner.

While concerns were raised about the compatibility of VMware products with Fibre Channel adapters, the association between VMware and Broadcom software was deemed unrealistic. Instead, the EU regulator focused on preventing Broadcom from restricting the compatibility of Fibre Channel adapters with VMware products to impede rival Marvell’s progress. To address this, Broadcom has been required to provide third-party companies with driver source code and tools to create compatible Fibre Channel adapters. This measure aims to ensure that companies have the assurance that their hardware functions seamlessly with VMware’s server virtualization technologies.

Broadcom had already received approvals for the VMware acquisition from several countries, including Australia, Canada, and South Africa. However, the deal is still under review by two of the industry’s most meticulous regulators: the US Federal Trade Commission (FTC) and the UK’s Competition and Markets Authority (CMA).

The significance of the Broadcom and VMware deal cannot be overstated, with potentially far-reaching implications for the software and semiconductor industries. This acquisition positions Broadcom, a direct competitor of Qualcomm, to bolster its software business significantly. VMware, previously owned by Dell before its separation in 2021, specializes in cloud computing and virtualization technology, remaining a leading provider of virtual machines alongside its rival Citrix.

Broadcom’s chips are widely used in Apple and Google smartphones, as well as in Wi-Fi/Bluetooth adapters found in a diverse range of devices. This agreement marks a pivotal moment in the IT landscape, with the merged Broadcom and VMware teams expected to concentrate on enterprise software organization and cloud computing.

Broadcom’s recent acquisition spree showcases its proactive approach to expanding its portfolio. In 2018, Broadcom acquired security and database software maker CA Technologies for $18.9 billion. The following year, it purchased Symantec’s enterprise security division for $10.7 billion, only to sell it to Accenture less than 12 months later. Additionally, Broadcom made unsuccessful attempts to acquire its competitor Qualcomm, which were ultimately blocked due to national security concerns.

As Broadcom inches closer to completing the acquisition of VMware, the industry awaits the potential transformation and innovation that lies ahead. This deal not only cements Broadcom’s position as a key player in the semiconductor industry but also sets the stage for a new era of technological advancements in cloud computing and virtualization.