To Our Shareholders

Despite the dramatic impact that the economic downturn had on the semiconductor industry as a whole in 2008, Broadcom had an excellent year, delivering record revenues and solid share gains across our core markets.

Our primary financial goal in 2008 was to profitably grow our business, which meant delivering solid revenue growth and strong expense control, yielding profits growing faster than revenue. I am pleased to report not only did we achieve this goal, but we also surpassed our own expectations.We increased annual net revenue by $882 million, up 23 percent from 2007, to $4.66 billion, in the face of a declining semiconductor market.

Our earnings in 2008 were adversely affected by an impairment charge of $171.6 million, primarily related to our mobile platforms business group. Also, in connection with our acquisition of the digital TV business (DTV) of AMD and one other acquisition, we recorded charges for in-process research and development of $42.4 million. Our earnings were also affected by settlement charges of $15.8 million.

Taking into account these charges, our earnings per share would have more than doubled.We ended the year with approximately $1.90 billion in cash and marketable securities without any debt. This was the result of strong cash flow from operations of $920 million offset by roughly $1.45 billion paid for acquisitions and share repurchases. During 2008, we repurchased 65 million shares or approximately 12 percent of our shares outstanding.

To put all of this in perspective, in a year when the semiconductor industry was down three percent, we achieved record revenues and grew our market share in key target markets.We also achieved a number of other important financial milestones in 2008 – we sharpened our focus on generating returns on past investments, strengthened our already solid financial position, and increased reporting transparency.

On the product and engineering side, we introduced a number of innovative 65 nanometer products that are playing a central role in the ongoing worldwide evolution in the way people communicate, are entertained and do business.We made significant strides in transitioning to 65 nanometer technology, and began working on transitioning some products to 40 nanometer technology.

These smaller geometries use less power and take up less space, two key features sought by our customers, who are constantly seeking to drive down costs, shrink size, and reduce power consumption in the products they make. Our progress in 65 nanometer migration gives us a strong competitive advantage against peer companies who are not as far along with this expensive transition and face the challenge of attempting to do so in the current weak economic environment.

Among a number of great product introductions during the year, one of the most exciting from both a technology and growth perspective was our “combo” wireless chips, which combine different functions such as Bluetooth®,Wi-Fi®, FM radio and GPS on one chip. Customer interest in these chips significantly exceeded our expectations. Based on our latest outlook, we believe that our wireless combo solutions in total could represent as much as ten percent of our total sales in 2009.

Now already well into 2009 and still facing industry-wide weakness, we continue to face a number of challenges but also see a number of opportunities. In this uncertain environment, we have shifted our focus from profitable growth to protecting our cash flow and ensuring that we are investing our research and development dollars in the right areas to drive market share gains.We have continued to step up efforts to reduce operating costs, including a number of cost reduction activities intended to yield in excess of $100 million of annual savings. Regrettably, these actions included a small reduction in force, which is an unfortunate, but necessary fact of life in these times.

As for opportunities, we are using the downturn to expand market share, by continuing focused investment into R&D for promising new product areas, while leveraging our strong cash position to pursue targeted acquisitions that can enhance our technology portfolio and/or accelerate our penetration into new markets.

In addition, we will continue to opportunistically reduce our shares outstanding through our share repurchase program.We believe that as the semiconductor industry eventually recovers, we will be in an especially strong position from a technology, product, market and earnings growth perspective.

Following are some of the highlights from 2008 and early 2009 in our three target markets:

Broadband Communications Products
In the broadband communications marketplace, we continued to demonstrate leadership and innovation in delivering digital entertainment and connectivity silicon solutions that power the connected home. During 2008, Broadcom announced a host of new products in both existing and emerging high-growth broadband markets such as high definition television (HDTV), cable, satellite and IP set-top boxes, DSL, cable modems and Blu-ray Disc® technologies. At the Consumer Electronics Show (CES) earlier this year, we demonstrated products not only for these consumer appliances within the home, but also the connectivity to enable these services across wired or wireless home networks.

At CES, we announced the industry’s firstMultimedia over Coax Alliance (MoCA®)-integrated system-on-a-chip (SoC) solutions for HD set-top box and gateway applications that allow cable, satellite and IP-network service providers to cost effectively transforma subscriber’s existing coaxial cable infrastructure into a whole-home media distribution network. This allows our service provider customers to offer additional value-added services, and enables consumers to streamdigitalmedia content such asmovies, videos,music and photos throughout their homes.

Our acquisition of AMD’s DTV business last year has enabled us to extend our DTV offerings to include a complete product line covering all DTVmarket segments. In 2008, our Blu-ray Disc chip became a preferred solution for Blu-ray Disc players, offering HD video playback at 1080p resolution, picture-in-picture video support, HD multi-channel audio and world-class BD-Java performance. Integrated security and streaming features have enabled manufacturers to deploy a new class of Blu-ray Disc players that feature Internet-based streaming media playback capabilities.

Mobile & Wireless Products
Broadcomcontinued to build and expand its leadership in several mobile and wireless segments. As more consumer devices utilize wireless technologies for advanced applications, our broad portfolio and integration capabilities have put us in a good position to capitalize on many exciting growth opportunities.

Broadcom’s wireless solutions are changing the way people stay connected to the friends, information and media that matter to them. Whether synchronizing devices with Bluetooth, traveling with a personal navigation device, using VoIP telephony services or streaming video files over aWi-Fi network, consumers are using Broadcom’s wireless products on a daily basis.

Broadcom is not only pushing the boundaries of performance, but is also improving the user experience and driving down the price of connected devices. In 2008, Broadcom launched a full line of cost-effective 802.11nWi-Fi solutions that enable video, audio and data applications throughout the home and office.We also introduced new Bluetooth solutions that provide stronger connections and lower power consumption, and won several key Bluetooth headset designs with our superior audio technology. To capitalize on the enormous opportunities in location-based services, we expanded our GPS network to support theWi-Fi positioning techniques.

In addition to enabling cutting-edge wireless applications in the home and office, our mobile and wireless solutions are driving advanced features into the next generation of portable electronics and our cellular basebands are being designed into mobile phones from the leading manufacturers. Beyond the baseband, our mobile multimedia processors are redefining the possibilities for HD video, 3D gaming and high-quality photography in mobile devices, and our new mobile TV solutions will soon enable broadcast services to handsets around the world. To accelerate 3G smartphone designs, Broadcom added support for several open operating systems and developed a reference platform that combines its latest cellular, multimedia and connectivity solutions.

Enterprise Networking Products
Broadcom continued to strengthen and differentiate its industry-leading portfolio of enterprise networking products by announcing new chips based on low power 65 nanometer technology in nearly every one of our Enterprise Networking Group business units.

Broadcomalso kept pace with the global environmental conservation theme that was ever present in 2008 with the introduction of “green” switches for small-to-medium business (SMB) applications. These low power devices support the current industry initiatives of removing lead (Pb) and other hazardousmaterials, such as halogens.

In 2008, Broadcom entered into the Enterprise WLAN market with a new 802.11n access point (AP) chip and software that solves many problems that have prohibited the proliferation ofWi-Fi in the workplace.

Additionally, Broadcom rolled out new switch and fabric devices, and physical layer transceivers, for enterprise, data center and carrier networks. Our high-speed controller business unit demonstrated storage traffic (iSCSI) running over a 10 Gigabit Ethernet network, and announced support for VMware’s virtualized server environment. Broadcom also unveiled a new security initiative with the introduction of two security processors for notebook computing platforms and point-ofsale terminals.

As we look further into 2009 and beyond, we will continue to focus investment on driving 10 Gigabit Ethernet deeper into servers, switches and the metro space, and by entering the embedded security and point-of-sale markets with a new family of security processor products.

In 2008, we added two new board members, Eddy Hartenstein and Bill Morrow. Eddy and Bill bring a great set of skills, plus deep experience in two of Broadcom’s largest target markets – broadband and wireless, respectively. They have already added a lot of value and brought new energy to our board discussions.

Also, as we head into 2009, Lanny Ross will retire from our board in May. Lanny has served on our board since 1995, and served as my predecessor and interim CEO from January 2003 until January 2005. Lanny played a key role in creating our decentralized business organizational structure that has enabled Broadcom to scale beyond many of our competitors. I would like to thank Lanny for his years of service to the company and his many contributions to Broadcom’s success.

In closing, I believe 2008 demonstrated the value of the investments we made in 2006 and 2007, and Broadcom’s product and technology portfolio has never been stronger. Our tightened financial management delivered extraordinary returns while substantially reducing our shares outstanding. The task now is to manage in more difficult times, making the right decisions to further strengthen the company and take maximum advantage of opportunities as the economy improves.

The foundation for our success is made up of core elements that have defined Broadcom for years – we have one of the industry’s broadest intellectual property portfolios addressing both wired and wireless transmission of voice, video, data and multimedia; strong cash flow; a well-earned reputation for superior engineering execution; and a robust product pipeline that is enabling the world to connect and communicate faster, better, more cost effectively and in more places.

The cornerstone of our strong foundation is and always has been our employees, who are among the best in the industry, be they engineers or the other professionals who all contribute daily to building on our successes.

I thank them for their steadfast dedication, hard work and remarkable skills. I also want to thank our customers and suppliers for their central role in making 2008 so successful. And, to our shareholders, thank you for your continued support of Broadcom, in our aim to become the world’s most successful communications semiconductor company.

Scott A. McGregor
President and Chief Executive Officer
March 17, 2009

Download Broadcom Corporation 2008 Annual Report

PDF format, 6.6MB, 145Pages.

Broadcom’s innovative products and technologies enable people to connect – locally and globally – for business, for fun, at home, at the office and on the move.

About Broadcom
Broadcom Corporation is a major technology innovator and global leader in semiconductors for wired and wireless communications. Broadcom® products enable the delivery of voice, video, data and multimedia to and throughout the home, the office and the mobile environment.

We provide the industry’s broadest portfolio of state-of-the-art system-on-a-chip and software solutions to manufacturers of computing and networking equipment, digital entertainment and broadband access products, and mobile devices. These solutions support our core mission: Connecting everything®.

Broadcom is one of the world’s largest fabless semiconductor companies, with 2008 revenues of $4.66 billion, and holds over 3,100 U.S. and 1,400 foreign patents, more than 7,600 additional pending patent applications, and one of the broadest intellectual property portfolios addressing both wired and wireless transmission of voice, video, data and multimedia.

Broadcom is headquartered in Irvine, California, and has offices and research facilities in North America, Asia and Europe. Broadcom Class A shares trade on the Nasdaq Global Select MarketSM under the symbol BRCM.

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