A June lawsuit accused Broadcom of anti-competitive activity by threatening to cut off chips to a Samsung subsidiary unless it agreed to only use the components to make products for BMW.
Harman Becker Automotive Systems, part of the Samsung subsidiary Harman International Industries, makes in-car touch-screen and driver assistance systems for customers such as BMW, General Motors, Audi, and Porsche. It uses Broadcom's chips to make these systems.
Broadcom sent Harman a letter in May saying that all chips Broadcom supplied to Harman must be used exclusively for BMW components. Harman said in the lawsuit that it had to either agree to Broadcom's demand at the expense of its other customers, or disagree and risk shutting down production.
Harman estimated that because of this arrangement, it would run out of the chips needed to produce automotive components earlier this month. It also estimated that its customer GM will experience shortages and line shutdowns starting in mid-July. This move also stifled competitive pricing from other chip suppliers, the lawsuit said.
The lawsuit accused Broadcom of approaching two Harman customers BMW and GM, "likely deliberately squeezing supply to win concessions from both." Broadcom and BMW then formed an exclusive chip partnership, which cut out Harman from the supply chain, according to the suit.
After discussions with Broadcom, Harman wrote to Broadcom saying that it did not agree to this.
Broadcom and BMW also entered an agreement where Broadcom would sell chips to BMW directly while only allowing Harman to have chips incorporated into BMW products. While Harman said it disagreed with this approach, it said it would recognize this arrangement to "mitigate any potential harm" to BMW but would pursue legal remedies, according to the complaint.
This isn't the first time Broadcom, which supplies chips to large companies like Apple, has come under fire for alleged antitrust moves. In 2021, the Federal Trade Commission charged Broadcom with illegally monopolizing markets for TV and broadband components through exclusive dealing, similar to the allegations in this lawsuit from Harman.
Last year, Broadcom came under antitrust scrutiny from the FTC again over forcing exclusive agreements with customers, the Information reported.
Broadcom is preparing to close its $61 billion acquisition of VMware. Europe's antitrust regulator signed off on the deal recently, but US and UK authorities are still reviewing it. Previously, employees told Insider that they expect some VMware units may be divested and there will be layoffs if the acquisition closes.
Broadcom and Harman Becker did not respond to requests for comment.
