Broadcom squeezed Samsung, now South Korea's squeezing back – hard
Regulators won't accept proposed remedy for nasty parts deal – but EU may have accepted VMware deal
Updated South Korea's Fair Trade Commission has sent Broadcom back to the drawing board, after finding it illegally tried to squeeze Samsung.
As the Commission explained in a Tuesday adjudicaiton, Broadcom and Samsung were in talks for a long-term supply agreement when the American chipmaker demanded the Korean giant sign or it would suspend shipments and support services.
Broadcom also wanted Samsung to commit to spending over $760 million a year, to make up the difference for any shortfalls, and not to buy from rivals.
With the market for the components it needs tight, Samsung reportedly signed. Then, when a certain viral pandemic cruelled its business, the giant conglomerate found itself having to buy parts it didn't need. The chaebol estimates the deal cost it millions.
News of the deal eventually reached the regulator, which in 2022 asked Broadcom to propose a remedy – a common method of dispute resolution in South Korea.
Broadcom proposed a $15.5 million fund to stimulate South Korea's small semiconductor outfits, plus extra support for Samsung.
On Tuesday, the Commission decided that's not a reasonable restitution because it doesn't include compensation for the impacted parties.
That's bad news for Broadcom, because it means the regulator will now escalate matters – first by determining if the chipmaker broke local laws and then by considering a different penalty.
South Korea is protective of its local businesses – even giants like Samsung that are usually capable of fending for themselves. Broadcom reps will soon have some tricky-to-negotiate meetings on their agendas.
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At least the corporation's legal team has experience at this sort of thing. In 2018 it was probed by US authorities over contract practices, and in 2021 was forced to stop some anticompetitive practices. In 2022 it was in strife again – this time for allegedly forcing its customers to sign exclusive supply contracts.
Now it awaits South Korea's wrath – and perhaps Samsung's too. ®
Updated to add at 2010 UTC, June 14
A Broadcom spokesperson sent The Reg the following statement:
Broadcom is disappointed with the Commission's decision to not approve the consent order that was agreed to by both Broadcom and the KFTC investigative team after a lengthy discussion process that included a full public comment period. The terms of that consent order represented a win-win for all involved, with significant benefits for Korea's semiconductor industry generally through the funding of various programs that would have facilitated the growth of domestic, advanced technological capabilities to have been managed by the Korea Semiconductor Industry Association. We will now turn to defending ourselves vigorously against these allegations and are confident that we will prevail.