How much of Broadcom’s revenue comes from haram?

Broadcom designs, develops, and supplies a broad range of semiconductor and infrastructure software solutions.

Broadcom earns its revenue from the following segments:

  • Products:

Includes sales from a range of semiconductor devices.

  • Subscriptions & Services:

Includes sales and royalties from software arrangements, support services, professional services, transfer of intellectual property, and non-recurring engineering arrangements.

The contributions from each of Broadcom’s revenue segments in their 2020 annual report were as follows:

Practical Islamic Finance concludes:

None of Broadcom’s revenue comes from anything inherently haram.

Does Broadcom rely on interest to operate?

Year-to-Date
for period ended
5/2/2021
Fiscal year
ended
11/01/2020
Fiscal year
ended
11/03/2019
Interest Income $94,000$53,000$98,000
Total Revenue$13,265,000$23,888,000$22,597,000
Interest Expense $1,036,000$1,777,000$1,444,000
Total Expenses$9,453,000$19,874,000$19,153,000
Interest Income / Revenue0.71%0.22%0.43%
Interest Expense / Total Expense10.96%8.94%7.54%
*Numbers in thousands, U.S. dollars

Practical Islamic Finance concludes: 

From the consistently elevated Interest Expense/Total Expense levels, Riba is relied upon in Broadcom’s operations.

What is Broadcom’s Environmental, Social, and Governance (ESG) impact?

Environment

According to Broadcom’s 2020 ESG report, Broadcom has begun converting its vacuum pump manufacturing technology from an oil-based system to a dry system that requires substantially less energy to operate and substantially eliminates hydrocarbon and polytetrafluoroethylene lubricant used in the pumps, as well as the associated hazardous waste.

The conversion results in a 48% reduction (approximately 106,000 kWh) in each pump’s annual electricity consumption.

To date, Broadcom has converted 33 vacuum pumps from an oil-based system to a dry system resulting in a reduction of approximately 3,498,000 kWh of annual electricity consumption.

Social

Broadcom has a Glassdoor rating of 3.4 out of 5 from current and previous employees compared to a 3.3 average for all other Glassdoor rated companies. 

Governance

No notable governance highlights.

Practical Islamic Finance concludes: 

Broadcom has a net positive ESG impact.

Comfort Rating

From Broadcom’s business, financial, and ESG reviews, Practical Islamic Finance rates Broadcom stock as: 

Uncomfortable to invest in from a halal perspective.

Justification for our rating

Broadcom’s consistent elevated use of interest to run its operations suggests a systemic reliance on interest. This causes Practical Islamic Finance to be uncomfortable investing in the company from a Halal perspective.

Sources

Broadcom 2020 Annual Report 

Broadcom Q2 2021 10-Q 

Broadcom Reviews
Broadcom 2020 Environmental, Social & Governance Report