Semiconductor giant Broadcom has agreed to end its market-monopolizing contracts ordered by the U.S. Federal Trade Commission (FTC).
🟩SoC for STB and Internet modem
BROADCOM WAS CERTIFIED AS A MONOPOLY ON THREE TYPES OF SEMICONDUCTORS USED IN BROADBAND COMMUNICATIONS EQUIPMENT AND SET-TOP BOXES (STBS). IT IS SAID THAT IT HAS SIGNED LONG-TERM CONTRACTS WITH OEM COMPANIES IN CHARGE OF EQUIPMENT MANUFACTURING IN THE TARGET SEMICONDUCTOR TRANSACTIONS, PREVENTING COMPETITORS FROM ENTERING.
- 3 types of semiconductors
- TV STB SoC
- xDSL modem SoC
- SoCfor fiber modem
STB:Set Top Box = Television pay-per-view receiver
SoC:System on Chip = Chip for specific systems
🟩 EXCLUSIVE CONTRACTS BETWEEN SERVICE PROVIDERS AND OEMS ARE PROBLEMATIC
ELIGIBLE COMMUNICATION EQUIPMENT IS PROVIDED BY TELEVISION AND BROADBAND SERVICE PROVIDERS, USUALLY TO CONTRACTED CONSUMERS. THE TELECOMMUNICATIONS EQUIPMENT ITSELF IS MANUFACTURED BY AN OEM WHO ACQUIRED THE CHIPSET FROM BROADCOM.
BROADCOM → OEM → SERVICE PROVIDER → SUBSCRIBER
*OEM ORIGINAL EQUIPMENT MANUFACTURER
IT WAS CERTIFIED AS EXCLUSIVE BECAUSE BROADCOM SIGNED LONG-TERM CONTRACTS WITH BOTH OEMS AND SERVICE PROVIDERS. THE AGREEMENT PREVENTS CUSTOMERS FROM PURCHASING CHIPS FROM BROADCOM’S COMPETITORS.
Broadcom designs and develops semiconductor components, including SoCs, and sells chips to OEMs as a direct customer. At the same time, it provides engineering and software support (ESS), which is essential for service providers.
🟩 broadcom monopolizes
Broadcom has had “exclusive or near-exclusive” deals with at least 10 OEMs since 2016. It was questioned that they had contracts with service providers such as AT&T, Charter, Comcast, DISH, and Verizon that would increase ESS support costs if they did not have exclusive agreements.
on the other hand, manufacturers developing chipsets for these communication devices have already withdrawn from this field. therefore, broadcom has an overwhelming advantage.
🟩WILL DEMAND FOR STBS GROW?
WITH THE DEVELOPMENT OF WIRELESS COMMUNICATION AND OTHER TECHNOLOGIES, THE DEMAND FOR STBS WILL NOT INCREASE BUT WILL DECREASE. HOWEVER, THERE ARE MANY OTHER CONSUMERS WHO WILL CONTINUE TO USE STB AS A “LONG TAIL” FOR SOME TIME. NOW THAT THE DEAL HAS BEEN REDESIGNED, IT WILL BE DIFFICULT FOR NEW PLAYERS TO ENTER THE MARKET.
broadcom intends to create added value by providing software development that suits the preferences of each service provider as well as semiconductors, but it seems that it was judged that it was hindering competition.
comments from broadcom
“i don’t agree with the allegations that i committed illegal activities, but i hope we can clean this matter down and focus on helping our customers.”
🟩 conclusion
Broadcom was noted to have exclusive contracts between STBs and service providers for SoCs for Internet modems
broadcom’s dominance will continue because of the already dominant dominance and the lack of growing demand. it seems normal for semiconductor manufacturers to prioritize engineering services on key customers in order to get their chips adopted.
THE CASE SHOWS THAT THE U.S. FEDERAL TRADE COMMISSION (FTC) IS MOVING TOWARD APPLYING STRICT ANTITRUST LAWS TO HIGH-TECH COMPANIES. HIGH-TECH COMPANIES WILL NEED TO THINK ABOUT COUNTERMEASURES.
