U.S. antitrust officials investigating Broadcom Inc. are significantly broadening their scrutiny to focus on whether the chipmaker abused its dominance to sell some of its most important semiconductor products, according to documents and a person familiar with the probe.
The Federal Trade Commission is seeking evidence that Broadcom’s conduct harmed competition in Wi-Fi and switch-chip markets, according to a civil investigative demand issued last week and obtained by Bloomberg News. The agency is looking into whether the company forced customers to deal with it exclusively.
The document, which is akin to a subpoena, shows that enforcers are now targeting the vast majority of Broadcom’s chip business. The company had disclosed an investigation last year that it said was “immaterial.”
Broadcom is one of the biggest suppliers of Wi-Fi technology used in smartphones and home routers and gateways, giving its chips a crucial role in the way the consumers get online. The company’s switch chips, the heart of devices that control traffic in computer networks, are used in machines by companies including Cisco Systems Inc. and Huawei Technologies Co.
Broadcom and the FTC declined to comment. The company’s stock fell as much as 7.3%, extending an earlier decline that followed the U.S. government’s action against Huawei Technologies Co., which hurt shares of chipmakers that supply the Chinese company. Broadcom shares were down 5.8% to $273.02 at 2:31 p.m. in New York.
A separate European Union investigation is continuing, the person said. That inquiry is examining Broadcom’s sales of chips in set-top box hardware used by the cable and satellite industry to provide television and internet to consumers, Bloomberg reported in October.
U.S. enforcers are asking not just about chips used in set-top boxes but also components used in network switches, according to the investigative demand.
The focus on Broadcom comes as FTC Chairman Joe Simons has vowed to increase antitrust scrutiny of technology companies. Earlier this year he created a task force to examine conduct of tech firms amid criticism that U.S. enforcers haven’t done enough to rein in the power of tech firms like Alphabet Inc.’s Google and Facebook Inc.