Broadcom announced back in May of 2022 that it would buy VMware for $61 billion and take on an additional $8 billion of the company’s debt, and on November 22 of 2023 Broadcom said that it had completed the acquisition. And it looks like Broadcom’s first big move is going to be layoffs: according to WARN notices filed with multiple states (catalogued here by Channel Futures), Broadcom will be laying off at least 2,837 employees across multiple states, including 1,267 at its Palo Alto campus in California.
As Channel Futures notes, the actual number of layoffs could be higher, since not all layoffs require WARN notices. We’ve contacted Broadcom for more information about the total number of layoffs and the kinds of positions that are being affected and will update if we receive a response. VMware has around 38,300 employees worldwide.
The WARN notices list the reason for the layoffs as “economic,” but provide no further explanation or justification.
Broadcom still makes most of its money from its wired and wireless communication products and other chips; 78 percent of the roughly $8.9 billion that Broadcom made in Q3 of 2023 was from its “semiconductor solutions” segment. But Broadcom has been trying to buy its way into enterprise software for years now, including an $18.9 billion acquisition of CA Technologies in 2018 and a $10.7 billion acquisition of Symantec in 2019.
Despite the layoffs, VMware will remain central to Broadcom’s enterprise software strategy. The company’s Broadcom Software Group will be renamed VMware, and the company is reportedly planning to emphasize software subscriptions rather than one-time sales to boost revenue. Aside from that, we don’t know many details about what a Broadcom-owned VMware will ultimately look like. The only VMware product mentioned at any length in Broadcom CEO Hock Tan’s post about the acquisition is VMware Cloud Foundation.
Prior to being owned by Broadcom, VMware had been part of Dell, a company better known for its consumer and business PCs, servers, and workstations. Dell sold off all of its shares of VMware in 2021, though Michael Dell himself remained the chairman of VMware’s board.