News that Avago Technologies will acquire Broadcom for $37 billion brings has people asking: what does Broadcom sell anyway, that it’s worth $37 billion? The answer is computer chips, or semiconductors. You’ve bought plenty of them, but never directly. (A semiconductor is the crucial element in computer chips –the two terms are sometimes used interchangeably. It’s called a ‘semi’ conductor because it doesn’t conduct electricity constantly like copper, which is a conductor, but in a controllable way. The most famous semiconductor is silicon, which gives Silicon Valley its name.)
The Avago-Broadcom deal is so rich because if there is any market in the world that will boom long into the foreseeable future, it’s the market in computer chips. Chips are increasingly part of every item manufactured, even some clothing now. The combined companies will make this only the sixth largest chip maker. Intel, Samsung, Qualcomm, and Micron are all larger.