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President Donald Trump introduces Broadcom CEO Hock Tan prior to Tan announcing the repatriation of his company’s headquarters to the United States from Singapore during a ceremony in the Oval Office of the White House, in Washington, DC, November 2, 2017.

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When Broadcom tried to buy rival Qualcomm for $120 billion in 2018, its efforts were thwarted. Qualcomm rejected the offer and the Trump administration declared the deal a potential threat to national security. 

In March of that year, Broadcom withdrew the bid, which would’ve been the largest technology deal on record, and said, “Qualcomm was clearly a unique and very large acquisition opportunity.”

As it turns out, Broadcom didn’t need it.

Broadcom shares soared 24% on Friday, their best day ever, and lifted the company’s market cap past $1 trillion for the first time. The chipmaker became the eighth member of tech’s 13-figure club. Since abandoning its Qualcomm offer, Broadcom shares are up more than 760%, trouncing Qualcomm’s 165% gain over that stretch. The S&P 500 is up 119%.

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Broadcom vs. Qualcomm

At the time of its announced acquisition effort, Broadcom’s official headquarters was in Singapore, which played into the Trump administration’s concerns. Broadcom filed to redomicile in the U.S., but Trump blocked the deal anyway.

Still, Broadcom CEO Hock Tan wasn’t deterred from taking big swings. Far from it.

Broadcom has since closed three deals valued at $10 billion or more, and it has ventured far outside of its core semiconductor market in the process. It agreed to acquire legacy software vendor CA Technologies for $19 billion in July 2018, and snatched up security software company Symantec for $10.7 billion in August 2019.

Tan’s biggest bet came in 2022, when Broadcom said it was buying VMware for $61 billion, jumping into the market for server virtualization. The deal took 18 months to close, and it trails only Microsoft’s $68.7 billion acquisition of Activision Blizzard and Dell’s $67 billion purchase of EMC on the list of biggest tech deals ever.

Broadcom “started as a semiconductor company and over the last six years, we kind of moved into infrastructure software, and that has gone very well,” Tan told CNBC’s Jim Cramer in a September interview. “The recent acquisition of VMware was essentially another step towards the direction of creating a very balanced mix between” chips and infrastructure software geared to the enterprise, he said.

Broadcom CEO Hock Tan sits down with Jim Cramer

Broadcom reported better-than-expected profit in its latest quarterly earnings report on Thursday, even as revenue came in just shy of estimates. Broadcom’s artificial intelligence business has lifted overall growth to rates typically reserved for company’s a fraction its size.

In the fiscal fourth quarter, AI revenue increased 150% to $3.7 billion, with some of that growth coming from ethernet networking parts used to tie together thousands of AI chips.

That drove an overall increase in revenue of 51% to $14.05 billion. Broadcom’s infrastructure software division generated $5.82 billion in revenue for the quarter, nearly tripling from last year’s $1.97 billion, a number that included a big boost from VMware.

Within the AI boom, Broadcom hasn’t quite kept pace with Nvidia, whose graphics processing units are being used to power the training and running of the most powerful AI models. Nvidia’s market cap has swelled by over 170% this year to $3.3 trillion, behind only Apple and Microsoft among the most valuable public companies in the world. Broadcom has doubled in value this year.

While trailing Nvidia, Broadcom has still positioned itself for hefty growth at a time that former chip titan Intel is downsizing and restructuring. It’s also far surpassed Advanced Micro Devices, which is valued at $206 billion after dropping 14% this year.

Broadcom refers to its custom AI accelerators as XPUs, which are different than the GPUs Nvidia sells. Broadcom said it doubled shipments of XPUs to “our three hyperscale customers.” The company doesn’t name the customers, but analysts say the three are Meta, Alphabet and TikTok parent ByteDance.

“The outlook for AI looks very bright for both GPUs and XPUs,” analysts at Cantor wrote in a note after this week’s earnings report. The firm recommends buying Broadcom shares and lifted its 12-month target to $250 from $225. The stock closed on Friday at $224.80.

History of big deals

The company that exists today as Broadcom is the product of a 2015 merger of Avago, which spun out of Agilent Technologies in 2005, and Broadcom, which was started in southern California in 1991. While Avago was the acquiring entity, the combined company took the name Broadcom. Tan, who was named CEO of Avago in 2006, was tapped to lead it.

Broadcom’s revenue in fiscal 2016 was $13.2 billion, and its biggest business was semiconductors for set-top boxes and broadband access.

The company’s market cap topped $100 billion in 2018, at which point wired infrastructure was still the primary source of revenue. Broadcom changed its financial reporting in late 2019 to focus on semiconductor solutions and infrastructure software, with the former accounting for about 73% of revenue in 2020.

But with the addition of VMware, infrastructure software has jumped from 21% of revenue in the October quarter last year to 41% in the period that just ended. Even excluding VMware, Broadcom said the business grew 90% from a year earlier.

The company said it expects infrastructure software revenue to increase 41% year-over-year in the current quarter to $6.5 billion while semiconductor revenue will rise by 10% to $8.1 billion. AI revenue will jump 65% year-on-year to $3.8 billion, the company said.

Broadcom’s market opportunity continues to grow because of the compute demands for large language models being created and deployed by the biggest tech companies, Tan told Cramer in September. 

“Each new generation LLM requires multiple x — 2-3x, maybe more — of compute, each time, each year,” Tan said. “You can imagine that’s a driver towards a larger and larger compute opportunity, which is going to be taken up largely by XPUs”

Alphabet, Amazon, Meta and Microsoft spent a combined $58.9 billion on capital expenditures in the latest quarter, according to tech research firm Futuriom. That represented 63% growth and equaled about 18% of aggregate revenue.

Broadcom’s differentiator in the market is that it’s making very expensive custom chips for AI for the world’s top tech companies with the promise of helping them move 20% to 30% faster and use 25% less power, Piper Sandler analyst Harsh Kumar told CNBC’s “Squawk on the Street” on Friday.

“You have to be a Google, you have to be a Meta, you have to be a Microsoft or an Oracle to be able to use those chips,” Kumar said. “These chips are not meant for everybody.”

WATCH: Broadcom’s visibility through 2027 is the most important news from the call

Broadcom's visibility through 2027 is the most important news from call, says Piper Sandler's Kumar

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CEO of Chinese smartphone brand Honor resigns due to personal reasons

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CEO of Chinese smartphone brand Honor resigns due to personal reasons

George Zhao, Chief Executive Officer of Chinese consumer electronics brand Honor, smiles as he shows the new Honor Magic 6 Pro smartphones during a presentation on the eve of the Mobile World Congress (MWC), the telecom industry’s biggest annual gathering, in Barcelona on February 25, 2024.

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George Zhao, the chief executive of Chinese smartphone firm Honor, has resigned from his position due to personal reasons, the company said on Friday.

“The company and the Board of Directors sincerely appreciate Mr Zhao’s outstanding contributions to the company during his tenure,” Honor said in a statement.

Jian Li, who’s been at Honor for four years in various senior management positions, will succeed Zhao as CEO.

In an internal memo posted by Chinese media and confirmed as accurate by an Honor spokesperson, Zhao said he was stepping down due to health reasons and planned to rest, recover and spend more time with his family.

Zhao called the decision to leave Honor “the most difficult decision” he has ever made.

Honor was spun off from Chinese telecommunications giant Huawei in 2020 in a bid to avoid U.S. sanctions that were crippling Huawei’s smartphone business.

Under Zhao’s leadership, Honor has aggressively launched smartphones with a focus on international markets. Zhao focused on high-end devices, including foldable smartphones, as he looked for Honor to look beyond China and challenge the likes of Samsung and Apple.

Honor’s market share in China has risen from 9.8% in 2020 to over 15% in 2024, according to Counterpoint Research. Outside of China, Honor’s market share hit 2.3% in 2024, compared to under 1% in 2020.

The company has looked to keep pace with rivals by launching artificial intelligence features on its device.

Neil Shah, partner at Counterpoint Research, said the company’s focus on high-end devices and technology is likely to continue under the new leadership.

“Honor’s focus on premiumization should continue if the brand wants to continue building its brand equity and differentiation point vs existing competitors, especially in premium markets such as Europe,” Shah told CNBC. 

“The focus on innovative foldable designs and advanced AI features and close partnerships with leading component suppliers would be key.”

Zhao’s successor Li will be tasked with trying to expand Honor’s presence overseas amid fierce competition, with a focus on making the brand more recognizable.

“Many don’t know Honor” outside of China, Counterpoint’s Shah said. “Building brand equity is tough and the company needs more time, money and differentiation points.”

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Tough new EU cyber rules require banks to ramp up security — but many aren’t ready

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Tough new EU cyber rules require banks to ramp up security — but many aren't ready

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Tough new European Union regulations requiring banks to bolster their cybersecurity systems officially come into effect Friday — but many of the bloc’s financial services firms aren’t yet in full compliance with the rules.

The EU’s Digital Operational Resilience Act, or DORA, requires both financial services firms and their technology suppliers to strengthen their IT systems to ensure the industry is resilient in the event of a cyberattack or any other forms of disruption. It entered into effect on Jan. 17.

The penalties for breaches of the new legislation can be substantial. Financial services firms that fall foul of the new rules can face fines of up to 2% of annual global revenue. Individual managers could also be held liable for breaches and face sanctions of as much as 1 million euros ($1 million).

So far, the rate of compliance among financial services firms with the new rules has been mixed, according to Harvey Jang, chief privacy officer and deputy general counsel at IT giant Cisco.

“I think we’ve seen a mixed bag,” Jang told CNBC in an interview. “Of course, the more mature-stage companies are further along looking at this for at least a year — if not longer.”

“We’re really trying to build this compliance program, but it’s so complex. I think that’s the challenge. We saw this too with GDPR and other broad legislation that is subject to interpretation — what does it actually mean to comply? It means different things to different people,” he said.

Mimecast CEO: Cyber awareness has reached the boardroom

This lack of a common understanding of what qualifies as robust compliance with DORA has in turn led many institutions to ramp up security standards to the level that they’re actually surpassing the “baseline” of what’s expected of most firms, Jang added.

Are financial institutions ready?

Under DORA, financial firms will be required to undertake rigorous IT risk and incident management, classification and reporting, operational resilience testing, intelligence sharing on cyber threats and vulnerabilities, and measures to manage third-party risks.

Firms will be also be required to conduct assessments of “concentration risk” related to the outsourcing of critical or important operational functions to external companies.

A Censuswide survey of 200 U.K. chief information security officers commissioned by Orange Cyberdefense, the cybersecurity division of French telecoms firm Orange, showed that 43% of financial institutions in Britain aren’t yet in full compliance with DORA.

That’s a concern because, even though the U.K. falls outside the European Union now, DORA applies to all financial entities operating within EU jurisdictions — even if they’re based outside the bloc.

“Whilst it is clear that DORA has no legal reach in the U.K., entities based here and operating or providing services to entities in the EU will be subject to the regulation,” Richard Lindsay, principal advisory consultant at Orange Cyberdefense, told CNBC.

He added that the main challenge for many financial institutions when it comes to achieving DORA compliance has been managing their critical third-party IT providers.

“Financial institutions operate within a multi-layered and hugely complex digital ecosystem,” Lindsay said. “Tracking and ensuring that all parts of this system evidentially comply with the relevant elements of DORA will require a new mindset, solutions and resources.”

Banks are also adding higher levels of scrutiny in their contract negotiations with tech suppliers due to DORA’s strict requirements, Jang said.

The Cisco chief privacy officer told CNBC that he thinks there is alignment when it comes to the principles and the spirit of the law. However, he added, “any legislation is a product of compromise and so, as they get more prescriptive, then it becomes challenging.”

“The principles we agree with, but any legislation is a product of compromise, and so as as they get more prescriptive, then it becomes challenging.”

Still, despite the challenges, the broad expectation among experts is that it won’t be long until banks and other financial institutions achieve compliance.

“Banks in Europe already comply with significant regulations which cover the majority of the areas that fall under DORA,” Fabio Colombo, EMEA financial services security lead at Accenture, told CNBC.

“As a result, financial services institutions already have mature governance and compliance capabilities in place, with existing incident reporting processes and solid ICT risk frameworks.”

Risks for IT suppliers

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Top EU official denies softer approach to Big Tech, cites ‘very clear legal basis’ for regulation

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Top EU official denies softer approach to Big Tech, cites 'very clear legal basis' for regulation

European Commission is 'fully enforcing' its tech regulations, executive vice president says

A leading EU official has denied taking a softer approach to Big Tech, citing a “very clear legal basis” for regulators and pointing to several ongoing investigations into the likes of social media platform X and Meta.

The FT reported earlier this week that the EU was reassessing investigations into Apple, Google and Meta — a process that could ultimately lead to the European Commission, the executive arm of the EU, scaling back or changing the focus of their probes.

However, speaking to CNBC on Thursday, Henna Virkkunen, the European Commission’s executive vice president for tech sovereignty, pushed back.

“We have our Digital Service Act that came into force a little bit more than one year ago, and there is several formal proceedings going on against, we can say, all the big platforms: Meta platforms, Instagram, Facebook, also on X and with TikTok,” Virkkunen said.

“We are continuing the work, so there is not any new decisions made. So we are doing the investigations [to see] if they are complying with our rules,” she said.

The Digital Services Act or DSA, which came into full effect in 2024, gives EU institutions the power to regulate Big Tech in a bid to prevent illegal and harmful activities online, and clamp down on disinformation.

Despite these new powers, however, there are growing questions about how the EU is actually going to enforce the rules, particularly in the aftermath of President-elect Donald Trump’s return to the White House.

“It remains to be seen what the EU will do, as some investigations have gone further than others, but it is also clear that U.S. tech companies will try to use the Trump administration to push back on EU rules,” Dexter Thillien, lead analyst at the Economist Intelligence Unit, told CNBC.

It comes as the tech industry attempts to cozy up to Trump ahead of his second term as president. Tesla’s Elon Musk, Amazon’s Jeff Bezos and Zuckerberg will attend Trump’s inauguration next week, according to NBC news.

Meta’s CEO Mark Zuckerberg last week, meanwhile, called on the incoming U.S. president to look at the EU’s approach to Big Tech, saying the way the bloc applies competition rules is “almost like a tariff.”

EU official Virkkunen is one of a new team of politicians that began their work as members of the EU’s executive arm in December. Until now, the bloc has been considered a leader of tech regulation and has opened the door to several probes into the behavior of Big Tech companies.

When asked if she was considering taking a softer approach to the sector, Virkkunen said: “We [have a] very clear legal basis and regulation rules in Europe, and of course, now we are fully enforcing those rules.”

Virkkunen did not say whether she was feeling pressure as a result of Trump’s return to the White House. Instead, she said, “all companies, whether American, European or Chinese, have to respect the EU’s regulations.”

Investigating X

In December 2023, Musk’s X was hit with the EU’s first probe under the Digital Services Act. The European Commission is assessing whether X breached transparency obligations and its duties to counter illegal content.

At the time, the institution said it was specifically assessing areas linked to risk management, content moderation, dark patterns, advertising transparency and data access for researchers.

As Musk continues to court the far-right ahead of an election in Germany — including hosting a live discussion with AfD party leader Alice Weidel — there are questions about whether the European Commission will assess this conversation as part of the investigation.

“This is not about Elon Musk. It’s about X,” Virkkunen said.

“X is [a] very large online platform, they have to take their responsibilities, and they have to assess and mitigate the risks, for example, what they are posting for the electoral processes and for civic discourse. But [the European] commission is already investigating X on this, and the scope of investigation is already quite large,” she said, adding that “we are all the time monitoring” in case of new developments.

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