Broadcom is reportedly in talks to add multinational data analytics vendor SAS Institute to its growing software portfolio. How SAS plays into the chipmaker’s broader strategy, however, remains unclear.

The Wall Street Journal, citing people familiar with the negotiations, reports a deal could be finalized in a few weeks and be valued at up to $20 billion.

Founded in 1966, North Carolina-based SAS Institute started out developing computer systems to process vast amounts of agricultural data being collected by the U.S. Department of Agriculture. Today, the company’s scope extends to data management, event streaming, data visualization, and analytics for mobile, Hadoop, and cloud convergence.

The rumored acquisition would mark Broadcom's latest high-profile software buy in recent years. Broadcom acquired infrastructure software vendor CA Technologies in 2018 for $18.9 billion, and bought up security vendor Symantec for $10.7 billion in 2019.

While the pairing may appear unorthodox at first blush, analysts agree SAS’s analytics capabilities would fill a gap in the chipmaker's software portfolio and have implications for its broader portfolio.

“Over the last five years, Broadcom has taken its solid foundations in the communications and semiconductor business and built through acquisitions a portfolio capable of tackling the core forces impacting digital operations – legacy, communications, security, and data analytics,” said Bola Rotibi, research director at CCS Insight. “The acquisition of SAS serves to plug a notable data analytics shape missing hole in Broadcom’s portfolio.”

Sameh Boujelbene, senior research director at Dell’Oro Group, echoed this sentiment, arguing the rumored acquisition was likely an effort by Broadcom to diversify and differentiate its portfolio in the face of growing competition from rival chipmakers.

“Despite the dominant share that Broadcom has in the network chip market, the emergence of new chip suppliers is expected to put more pressure on Broadcom’s margin,” she said. “There is an increasing number of features that the network needs to support in order to accommodate all the changes brought by digital transformation, IoT, and artificial intelligence (AI) and machine learning applications.”

Boujelbene said SAS’s analytic prowess could address the need for greater network visibility and automation.

“At first glance Broadcom seems like an odd and unlikely suitor for an advanced analytics AI company. However, it would immediately make Broadcom a player in enterprise AI,” Mike Gualtieri, Forrester VP and principal analyst, said. “Broadcom would get a world-class AI and advanced analytics research organization, a newly refactored cloud product portfolio — SAS Viya — and thousands of enterprises customers that are dependent on SAS products.”

How the rumored acquisition would impact SAS’ 83,000 existing customers remains unknown.

Boris Evelson VP and principal analyst at Forrester Research, doesn’t believe Broadcom will interfere with SAS' existing operations, at least in the near term. “Mutual clients may even benefit from potential synergies derived from at least a couple of complementary products: mainframe-based analytics and those using analytics for regulatory compliance use cases,” he said.

However, he cites several challenges for SAS and Broadcom should acquisition talks move forward. One of the most glaring is SAS’s poor penetration in the enterprise space. “Ultimately, whether SAS’ other data and analytics products remain strategic at Broadcom will depend on continued growth of its core base, or whether that base will erode due to overwhelming competition from hyperscalers,” he said.

Gualtieri added that SAS doesn’t have good visibility, especially among “newly minted data analysts and data scientists,” which he said have shown a preference for open source technologies based on Python and the R data analytics language.

The Wall Street Journal report comes less than a week after Broadcom was labeled a monopolist in an FTC complaint charging the chipmaker of employing illegal and anti-competitive business practices to lock in customers.

The agency alleged the chipmaker used its market position to force original equipment manufacturers (OEMs) into long-term agreements that prevented them from acquiring chips from rival vendors. The FTC is considering imposing a consent order which would prohibit the chipmaker from requiring its customers to source components on an exclusive basis.

And while the FTC complaint was limited to the company's business practices surrounding the sale of chips for television set-top boxes and DSL and fiber internet services, it could have regulatory implications for future acquisitions.