Broadcom CEO: Israel one of our top tech assets

Broadcom, the international semiconductor company, continues to increase its involvement in Israeli high-tech.

At a meeting Wednesday with President Shimon Peres, Broadcom CEO Scott McGregor said that the company’s Broadcom Foundation would donate $100,000 to the Israeli-sponsored team in Google’s Lunar X Prize contest, a $30 million competition for the first privately funded team to send a robot to the moon. The contest is being used by Israel as a vehicle to promote technology and science education among Israeli youth, and at the meeting with Peres, McGregor said the donation was a continuation of Broadcom’s already substantial involvement in Israeli science education.

McGregor was in Israel for Broadcom’s first all-hands event here, which gathered the company’s entire Israeli staff of 500 for a discussion of Broadcom’s accomplishments and plans for the future. At a meeting with journalists after the event, McGregor described the company’s strategies, plans, and challenges, and especially its involvement with Israel.

Broadcom has been one of the biggest international buyers of Israeli tech startups in recent years, acquiring five companies since 2009 (and a total of nine since 2001), and McGregor said that Broadcom is set on even more Israeli acquisitions. Broadcom chips are in a wide variety of products, from backbone communications systems for mobile operators to consumer products like iPhones and iPads, and everything in between. According to the company, 99.98% of all Internet and mobile network traffic passes through a Broadcom chip, and McGregor attributes the company’s success to its emphasis on no-nonsense technology basics, and its no-nonsense tech staff, made up largely of engineers – with Israeli engineers making a significant contribution to the company’s success. “There are many great engineering teams in Israel, and our company is about great engineers.”

Worldwide, 76% of Irvine, California-based Broadcom’s employees are engineers, while some 95% of the company’s 500 Israeli staff have engineering degrees. That, said McGregor, “is one reason we’re excited to do business in Israel.” Altogether, Broadcom has about 10,000 employees in 41 sales centers and 65 design centers around the world.

And in order to ensure that Israeli schools turn out engineers that will continue to develop technology at Israeli start-ups – technology that Broadcom may end up acquiring, McGregor said – the company has sharply increased its investment in Israeli education over the past several years. The Broadcom Foundation, a nonprofit group funded by the company, has donated cash, equipment, and expertise to Israeli institutions of higher education, including the Technion and Tel Aviv University.

But even more important, McGregor said, is the company’s investment in middle schools. “Middle school is where most kids decide whether or not they want to pursue an engineering education,” McGregor said. “We want to interest them in a career in engineering, and encourage them to stick with it. It’s good for the kids, and good for us.” Among Broadcom’s other educational programs in Israel is its Broadcom Masters competition for 6th, 7th, and 8th graders in science, technology, engineering, and math, and a science fair for middle school kids.

“Israel has been very good to Broadcom,” McGregor said. “Israel has a smart and passionate entrepreneurial culture that is well suited to the way we work.”

Broadcom, the world’s biggest fabless semiconductor maker — meaning it designs chips but outsources the production — sees itself as start-up-like, McGregor said, and that was something it had in common with many Israeli companies. “We are not a big bureaucratic company where it is difficult to get administrators to understand technical problems or issues. Any employee can talk directly to managers, even top administrators and the CEO, at any time.” Just like in Israeli startups, McGregor said, “people come to work for Broadcom because they want to work for a big company, but in a young, dynamic start-up atmosphere.”

That said, the company is not without its challenges. China, which has plenty of its own engineers, may eventually provide competiton for Broadcom. Not now, though, said McGregor. “The Chinese have tried to steal some of our thunder and make their own chips,” whether by reverse engineering or attempting to duplicate their function. But, McGregor added, “We have been able to stay ahead of the curve.” This, despite the fact that Chinese device manufacturers have become important customers for Broadcom, since many of the chips used in the devices they make are made exclusively by Broadcom.

One reason Chinese chip makers won’t catch up to Broadcom is the head start the company has had in advanced technology – again, thanks to Israeli technology. One example of that advanced technology, said McGregor, was the high-speed network switching fabrics developed by Dune Networks, which Broadcom acquired in 2009. Dune’s switching technology allows greater interconnectivity and advanced port switching, and is far ahead of what the Chinese are capable of today. “If you innovate fast enough and strongly enough you can stay ahead,” said McGregor, and Broadcom expected to be able to do so, thanks in large part to advances made by the company’s Israeli teams.