Broadcom’s AI chip sales more than triple as custom silicon orders build

Large semiconductor company Broadcom reported record revenue, operating income and free cash flow for its third fiscal quarter, with revenue rising 86 per cent from a year earlier to US$29.6 billion for the three months to August 2, driven by the custom processors it designs for artificial-intelligence (AI) customers.

Artificial intelligence semiconductor revenue reached US$16.7 billion for the quarter, more than tripling year-on-year, and the company guided to a further sharp increase in the current quarter.

“Demand for our custom AI accelerators and networking continues to be very strong,” said Hock Tan, president and chief executive officer, adding that the outlook remains strong.

“In the fourth quarter the momentum continues, and we expect AI semiconductor revenue to accelerate to $21.7 billion, up 236 per cent year-over-year.”

Generally accepted accounting principles operating income for the quarter was US$16.0 billion. The board declared a quarterly cash dividend of US$0.65 per share, payable on September 30 to shareholders of record on September 21.

Broadcom is one of the world’s largest semiconductor companies by revenue and supplies networking, broadband, wireless connectivity and storage components used in data centres, mobile handsets and telecommunications equipment, alongside a substantial enterprise software division. Its custom accelerator business differs from that of rivals selling standard processors: Broadcom co-designs chips with individual large technology customers, which concentrates its growth in a small number of accounts.

Fourth-quarter revenue guidance of US$34.8 billion sits marginally below analyst expectations of around US$35 billion, even as the longer-range artificial-intelligence outlook runs ahead of them.

business@gleanerjm.com