Why SmartNICs are Key in the Broadcom-VMware Deal

It’s been over a year since Broadcom (Nasdaq: AVGO) announced its intent to buy VMware (NYSE: VMW) for $61 billion, but the merger still seems months away from closing, according to a May 2023 SEC filing. Meanwhile, there’s growing speculation about the perils and possibilities the deal could bring.

As of this writing, Broadcom’s plans have stalled due to regulatory concerns in the U.S., the U.K., and China. (Authorities in Brazil, Canada, and South Africa have approved the proposed merger.)

The major issue in the U.S. and U.K. opposers’ crosshairs has to do with smart network interface cards (smartNICs), aka data processing units (DPUs). These are devices that offload data from a server’s CPU to accelerate performance. SmartNICs are essential elements in the high performance computing (HPC) required by cloud hyperscalers, and they play a key role in the accelerated computing required for generative AI.

Broadcom’s interest in smartNICs has been clear from the start. The company even tried to create its own Stingray DPU but has apparently stopped work on the project. Now that AI is on the rise, the semiconductor vendor’s interest in the technology has gone up a notch. On Broadcom’s latest quarterly earnings call, CEO and president Hock Tan referred to a key growth driver for the company’s business as “compute offload and networking.”

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