Broadcom was hit with a hammer after it took unfair measures, such as stopping shipments of components, to prevent Samsung Electronics from using its competitors' components.

The Fair Trade Commission (Chairman Han Ki-jung) decided to impose a corrective order and a fine of KRW 19.1 billion (tentative) on Broadcom for causing disadvantages to Samsung Electronics by forcing it to enter into a long-term agreement (LTA) for the supply of parts that was disadvantageous to Samsung Electronics through unfair means such as suspending shipment of parts.


Broadcom is a semiconductor company with an overwhelming market share in cutting-edge, high-performance wireless communication components used in smart devices such as smartphones and tablet PCs.

At the time, Samsung Electronics and Apple were fiercely competing in the premium smart device market, and companies like Samsung Electronics were relying on Broadcom for most of the cutting-edge, high-performance components used in expensive premium smart devices.

On the other hand, as competition began in some parts in 2018, Broadcom conducted a thorough review in advance and established an LTA conclusion strategy using its exclusive parts supply situation in December 2019 to prevent Samsung Electronics from leaving as a competitor and to secure long-term sales.

At the time, Samsung Electronics was introducing some competition in a market that Broadcom had virtually monopolized.From the beginning, they had no intention of signing an LTA in order to pursue a policy of diversifying component supply chains, and they continued to reject Broadcom's demands, citing opportunity costs and serious financial losses.

Accordingly, Broadcom has been pressuring Samsung Electronics to sign an LTA since February 2020 by using a series of unfair means, including suspending approval of component purchase orders, suspending shipments, and suspending technical support.

Due to serious supply disruptions caused by shipment suspensions and unapproved purchase orders, Samsung Electronics signed an LTA on March 27, 2020, to purchase at least $760 million worth of Broadcom components annually for three years starting in 2021, and to compensate for the difference if the actual purchase amount falls short of $760 million.

After Broadcom filed a strong complaint to Samsung Electronics, calling the competitor its "hated competitor," when Samsung Electronics adopted some of its competitor's components in accordance with its strategy of diversifying its component supply, LTA began to be seriously discussed, and this incident was pursued in order to exclude the competitor.

Broadcom also recognized that Samsung Electronics would be put in a serious situation, as it compared the measures taken against Samsung Electronics at the time, such as “suspending purchase order approval and shipment,” to “dropping a bomb” and “nuclear bomb,” and considered it “against corporate ethics” and a “threat” to Samsung Electronics.

On the other hand, Samsung Electronics was at a great disadvantage in the negotiations due to Broadcom's actions such as shipment suspension at the time, and was in a desperate situation where it had no choice but to accept Broadcom's unilateral demands. Samsung Electronics' situation is well revealed in the emails at the time that said, "There are concerns about disruption to the production line," "I don't have any cards," and "Broadcom is not in a hurry, so please wait a little bit."

To comply with this LTA imposed by Broadcom, Samsung Electronics switched from the competitor products it had initially adopted to Broadcom components.

In addition, the company had no choice but to mobilize all available means to purchase $800 million worth of components, including installing Broadcom components in popular models that were not targeted for purchase and pre-purchasing next year's volume.

Accordingly, Samsung Electronics initially decided to install components from a competitor in the Galaxy S21 released in 2021, but eventually had to abandon this and adopt Broadcom's, making it impossible to continue its strategy of diversifying its component supply, and its options were limited. In addition, Broadcom's components were more expensive than those of competitors, resulting in financial disadvantages due to unit price increases.

In addition, as Samsung Electronics' component selection was limited by the LTA, Broadcom's competitors were deprived of the opportunity to compete fairly on the price and performance of their products. In addition, in the long term, it has led to a situation where the investment incentives of parts manufacturers have disappeared, innovation has been hindered, and the damage has been passed on to consumers.

The Fair Trade Commission determined that Broadcom's actions constituted abuse of its dominant position over its trading partners.

The significance of this measure by the Fair Trade Commission lies in the fact that it has established a fair trading order and created a competitive environment in the semiconductor market, a key foundation industry for technological innovation, by restraining leading semiconductor companies such as Broadcom from abusing their superior position to disadvantage their trading partners and restricting competition in the relevant market.

In particular, the semiconductor market is closely linked and interacts with upstream industries such as smart devices, automobiles, robots, and artificial intelligence (AI) as well as downstream industries such as semiconductor materials, parts, and equipment, so the restoration of fair trade order in this market is even more meaningful in that it can have a ripple effect on related markets.