Shares of Broadcom plunged 5.8% in premarket trading Thursday after South Korea’s antitrust regulator imposed a $14.2 million fine, citing the company’s unfair business practices against Samsung. Further, a separate report revealed that Alphabet’s Google was considering dropping Broadcom as its artificial intelligence (AI) chip supplier.
Why is Broadcom’s Stock Price Down?
South Korea’s antitrust regulator announced on Thursday that it will tentatively fine Broadcom and its affiliates 19.1 billion won ($14.2 million) after the company allegedly forced a long-term supply agreement one-sidedly disadvantageous to electronics giant Samsung. Moreover, the nation’s Fair Trade Commission (FTC) will issue a corrective order to the company.
Meanwhile, Broadcom took another blow on the day after Google executives discussed dropping the semiconductor manufacturer as its supplier of AI chips as early as 2027. In that case, Google plans to develop the sophisticated chips in-house.
The move comes after Google’s directors established a goal earlier in the year to dump Broadcom due to a standoff between the two companies over the price Broadcom was charging for the chips, also known as tensor processing units (TPUs). Furthermore, Google intends to roll out an improved networking chip under the code ‘Granite Redux,’ in collaboration with Marvell Technology.
Broadcom’s stock fell 5.8% in the premarket on the two reports after closing down 1.66% at $830.57 on Wednesday.
Broadcom Controversy and Regulatory Issues
Founded in 1961, Broadcom is a global semiconductor and infrastructure software company headquartered in San Jose, California. The company designs and manufactures various semiconductor solutions for wired and wireless communication, data centers, and networking applications.
Over the years, the chipmaker has faced controversy due to its aggressive acquisition strategy and alleged anti-competitive practices. In 2018, it was reported that the FTC had been investigating Broadcom for several months due to its anti-competitive tactics while holding customer talks.
A year later, the European Union (EU) regulators ordered the company to stop its alleged monopolistic practices and forced it to agree to an antitrust complaint. The semiconductor maker was accused of abusing its power through restrictive contract terms and threats of retaliation against non-compliant customers.
In addition, Broadcom was also involved in multiple high-profile takeover attempts, including its hostile bid for Apple’s chip supplier Qualcomm. Former US President Donald Trump blocked the deal, citing national security concerns.
This article originally appeared on The Tokenist
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