Broadcom Corporation (NASDAQ:AVGO) is in talks to acquire cloud computing company VMware Inc in a deal that would vault the chipmaker into a highly specialised field of software.
VMware's market value is currently about US$40bn and its acquisition would be the biggest move yet by the acquisitive corporate.
In the last four years, Broadcom has acquired CA Technologies for US$18.9bn and Symantec Corporation (NASDAQ:SYMC)'s security division for US$10.7bn, and the VMware deal would help diversify its business away from semiconductors into enterprise software.
It would be the latest in a string of acquisitions for Broadcom's chief executive Tan Hock Eng, whose firm is among the largest and most diversified in the chip industry.
Storage technology major EMC Corporation (NYSE:EMC) acquired VMware in 2004, and then sold a portion of its stake in VMware as part of the company's IPO three years later.
Dell Inc. (NASDAQ:DELL) acquired the business when it acquired EMC in 2016, and Dell then spun off VMware last year.
Michael Dell and Silver Lake remain VMware's biggest investors, and while Michael Dell holds a 40% stake in VMware, private equity firm Silver Lake, which invested in Broadcom previously, holds a 10% stake in VMware.
Broadcom had previously been in talks to acquire SAS Institute, a closely held software company valued between US$15-20bn, but talks ended last year without a deal.
A 2018 bid by CEO Eng to buy rival chipmaker QUALCOMM, Inc. (NASDAQ:QCOM) was also blocked after Broadcom encountered resistance from the Trump administration.