Avago

San Jose, California

Partnership Connects

Avago Technologies is a leading global designer, developer and supplier of analog semiconductors. The company’s products can be found in a wide range of devices including smartphones, data networks, computer peripherals and supercomputers. With a 50-year history of innovation, Avago holds more than 5,000 U.S. and foreign patents and patent applications and employs more than 3,500 employees globally.

Throughout its history, Avago has been a leader in innovation and engineering expertise. However, as a captive subsidiary (first of HP and later Agilent), it was not managed to its full potential. KKR and our partner Silver Lake saw an opportunity for Avago to thrive as an independent company and in 2005 led the carve-out from Agilent.

In the nine months that followed the carve-out, we and KKR Capstone partnered with Avago’s management to create a stand-alone company that was significantly more effective and efficient than the historical model. We strengthened the company by hiring new CEO Hock Tan, an experienced semiconductor executive, as well as other key executives and by divesting several non-core businesses.

Over the course of the next four years, the new management team improved the business by re-focusing the product portfolio and redeploying R&D spending in core areas such as wireless, fiber optics and networking. From 2007 to 2010, Avago achieved annual growth of 11.1 percent and increased profitability by 25.8 percent annually. In August of 2009, Avago was listed on the NASDAQ stock exchange in an IPO supported by KKR Capital Markets. The focus on long-term performance has benefited the public owners of the stock as Avago has outperformed market indices, including the SOX (Semiconductor Index), NASDAQ and the S&P 500 since the IPO.