Broadcom, which was started in 1991, is being bought by rival chip maker Avago for $37 billion. (Robert Gauthier, Los Angeles Times)
By Tiffany Hsu and Jerry Hirsch
May 29, 2015
Irvine chip maker Broadcom Corp. is the latest of many corporate headquarters to exit Southern California, leaving the business community puzzling over the causes and effects.
The technology stalwart — set to be sold for $37 billion in cash and stock to semiconductor rival Avago Technologies — launched in Santa Monica in 1991 and then moved to Orange County in 1995.
After Thursday’s transaction, the company will be incorporated in Singapore, mostly for tax reasons, but its principal operating headquarters will be in San Jose. A significant presence will remain in Irvine.
Some experts say the loss of corporate headquarters and their influential business leaders rob the region of prestige and hampers its ability to attract other companies and workers. Others counter that such losses mean little beyond bragging rights, especially in cases like Broadcom, where the merged company is expected to leave the bulk of its workforce in place.
“It’s kind of an ego boost, almost a macho thing, counting the big wigs and headquarters in town,” said Christopher Thornberg, founding partner of Beacon Economics.
Although business advocates and economists argue over the effect of lost headquarters, it’s clear that Southern California has seen a run of major corporate departures in recent years. Whether that reflects poorly on the local business or regulatory climate is a more complicated question.
Corporate headquarters defect from Southern California for two reasons: by choice or by acquisition.
Last year, Toyota Motor Corp. said it would move its sales and marketing headquarters to suburban Dallas from Torrance, and Occidental Petroleum Corp. moved its headquarters from Los Angeles to Houston; and Irvine-based Botox maker Allergan Inc, was taken over by Irish firm Actavis and its headquarters eventually relocated to Dublin.
Earlier departures included DaVita Inc., which operates kidney dialysis service centers and decided in 2009 to move from El Segundo to Denver. The next year, Northrop Grumman Corp. said it would jump ship from Los Angeles to Falls Church, Va.
Companies that choose to move “are saying something negative about the business environment in Southern California,” said Aaron Renn, senior fellow at the Manhattan Institute for Policy Research.
But the loss of headquarters through acquisition, as with Broadcom, is just part of business. Big companies are buying and selling each other faster than ever before, thereby shifting their headquarters around the globe.
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