The unlikely turn of events comes as Broadcom, a maker of high-speed communications circuits, announced a US$1 billion deal this week to buy ServerWorks, a company that makes chip sets for workstations, network servers and storage devices.
ServerWorks became a key supplier of Intel-based chip sets last year after the giant chip maker was forced to scrap plans for three circuit boards due to a faulty component packaged with its Rambus-based chip set. The problem ultimately caused Intel to recall nearly a million of its 820 chip sets.
Broadcom's buyout of ServerWorks, its thirteenth acquisition within the last year, could prove to be its most important to date because, unlike like previous takeover targets, ServerWorks has a profitable track record and an established market share. The deal could also greatly improve Broadcom's ability to market a variety of high-speed data-transfer technologies, including InfiniBand, Ethernet and Fibre Channel products, as well as give it access to leading corporate players.
For the last year, ServerWorks is expected to report revenue of nearly $200 million. The company also has contracts with many of the computer industry's leading players, including Cisco Systems, Compaq Computer, Dell Computer, EMC, Fujitsu, Hewlett-Packard, IBM and -- oh yes -- Intel.
In fact, Intel, which owns 5 percent of ServerWorks, has an intellectual property agreement with ServerWorks that runs through 2008, Broadcom officials confirmed this week. Currently, ServerWorks is developing chip sets for Intel's newest Pentium 4 processors.
