In the Bible, we learn how the ancients drew from the wells of the Holy Land,
supporting their flocks and families with the nurturing water of the Land of
Israel. Today, visitors also draw from Israel’s wells – but today’s wells are
stocked with silicon chips, not water.
A good example is Broadcom, which
is the biggest fabless semiconductor company in the world. It is also one
of the biggest hi-tech foreign investors in Israel. And those two facts go
together for a reason, says Dr. Shlomo Markel, vice president of Broadcom and
director of the company’s Israel operations.
“Out of the 50 or so
acquisitions Broadcom has made in recent years, seven have been of Israeli
companies,” he says. “Israeli companies are innovative and work on
next-generation technology. Often they are just starting out, so they
aren’t necessarily profitable. But it’s the technology we’re interested
in, not the company balance sheet.”
It’s part of what can be broadly
termed the “Broadcom way,” a different way to do business in the hi-tech world.
While many hitech startups-turned-conglomerates have long given up their lean,
mean startup ways, Broadcom has taken great pains to retain that culture – and
Israel is a big part of the company’s story. It’s a tale of how a huge
multinational gets a big added value from Israeli technology – and how Israel
technology developed at small startups gets top billing on the movie marquee of
a top hi-tech company.
Markel says Broadcom, which has 8,300 employees
and had a revenue of $4.49 billion in 2009, sees itself as a startup – but a
wellfunded one that can afford to acquire companies it feels will help it move
“We buy companies not because of their financials, but because
of their technology and patents,” he says. “We try to keep the startup culture a
constant in our company, in order to encourage innovation. One of the
reasons we have acquired so many startups is to tap into that startup spirit.
It’s part of our culture, our DNA.”
And oh yeah, Markel says, because it
isn’t interested in the financials, Broadcom often leaves the companies it
acquires alone to continue innovating.
“The workers stay on and get absorbed
into the broader corporate structure, but continue to work as part of their
startup,” he says.
The emphasis on startup culture is one reason why
Broadcom feels so comfortable in Israel, Markel says, adding that you sort of
just get inspired to innovate just by hanging around here in Israel!
Not as much
of a household name as some of its hi-tech sisters, Broadcom is one of the
world’s biggest sellers of telecommunication products and
semiconductors. Among its more well-known products are the video
processor chip for Apple’s fifth-generation iPod and the WiFi+Bluetooth combo
chip for Apple iPhone 3GS and second-generation iPod touch. That chip was at the
center of an egg-on-face scandal in which the Communications Ministry banned
iPads for being “incompatible with Israeli standards” – while allowing iDigital,
the Apple reseller in Israel, to freely sell iPhones and iPods that contained
the same chip.
Broadcom has about 14,000 patents. Its most recent
acquisition in Israel was Percello, which makes femtocells (small cellular base
stations that connect to a service provider’s network via broadband and can
support multiple cellphones, extending coverage indoors or in areas with weak
Broadcom paid $86 million in cash for Percello last
November. Before that (in late 2009), the company bought Dune Networks of
Yakum, which makes a chipset that can be used to build and manage a network
fabric for largescale computer environments, such as cloud computing centers and
data grids. Before that, it was Kfar Saba’s M-Stream, whose products employ
advanced error-correction algorithms to cellphone calls with weak signals and
reconstruct lost information to restore reception quality.
a new member of the Broadcom family finds itself integrated directly into the
corporate division that its product specializes in, Markel says, including
broadband, infrastructure, wireless (bluetooth, wifi, etc.) or mobile platforms.
Unlike nearly every other multinational, Broadcom does not set up its corporate
structure based on geographical divisions (Europe, Middle East, etc.); divisions
are based on their technology area.
While the structure issue seems like
a piece of corporate trivia, Markel says it’s actually an important guidepost to
Broadcom’s philosophy: staying on target as a technology-focused
Markel reports to Broadcom cofounder and CTO, Dr. Henry
Samueli – and at Broadcom, he says, CTO is a very, very important
That focus on technology means that the company makes different
choices than many of its corporate peers; there’s none of that “automatic
downsizing” that usually takes place when a small startup is acquired by a
“Right now there are 20 percent more workers at Dune than
there were last year, before we acquired them,” Markel says. “That’s far
different than what happens at most large corporations.”
other duties at Broadcom (M&A, investments, R&D road maps), Markel also
keeps an eye on Israel operations for the company. Israel is one of Broadcom’s
most important assets, he says, and the company shows its love in all sorts of
ways, big and little.
“For example, Israel is one of the most frequently
visited destinations for Broadcom executives,” Markel says. “You rarely find
more than one or two on a visit to any of the other countries where we have
acquired companies – England, India and others – but there always seems to be a
Israel, the top people at Broadcom realize, has a great
potential for future growth in all the areas the company is working in. It’s a
symbiotic relationship – one that benefits both Israel and the rest of the
hundreds of millions of people Broadcom’s products