Anyone can program with the help of AI

Broadcom Expects Stronger Semiconductor Growth on AI Demand

US chipmaker Broadcom Inc. expects investment in artificial intelligence (AI) to accelerate semiconductor growth further than anticipated this year despite slowing demand in some segments weakening sales in the area.

The Palo Alto-based company reported first-quarter revenue of $7.39 billion at its core semiconductor solutions business, presenting a 4% rise as the firm observed solid demand for its networking products in AI data centers and tailored AI accelerators from hyperscalers.

The figure was below analysts’ forecasts of $7.70 billion, although Broadcom is still moving towards the $50 billion sales mark for this fiscal year, which is due to end in October.

AI to Offset Broadcom’s Shortcomings and Accelerate Growth

The AI boom has driven demand for Broadcom’s equipment, but sales in certain areas, such as telecommunications, are losing momentum and weighing on its semiconductor division.

On the other hand, its infrastructure software unit fared well in the quarter ending January 31, posting revenue of $4.57 billion to surge 153% as the company benefited from its $69 billion purchase of US cloud computing firm VMware LLC, which concluded in November 2023.

Broadcom chief executive Hock Tan has created the chip supplier for Apple Inc. and other major tech companies on a series of acquisitions and diversification through an expansion to software, which received a boost from its acquisition of VMware.

Tan said their AI spending would increase this year, and they now see AI demand representing 35% of its semiconductor revenue in fiscal 2024 from its earlier estimate of 25%.

Investors are seeking firms that may have an AI windfall this year, following Nvidia Corp.’s success in 2023.

Broadcom does not develop chips for large language model (LLM) training. Still, it provides critical networking equipment and custom chip design, which is vital to data centers handling AI-related processes.

While its chip revenue missed expectations, demand for networking products from AI data centers was high, and big cloud computing companies had a strong need for its custom AI chips, according to Tan. He stated that those two factors are supporting their semiconductor growth.

Broadcom is a leading supplier of networking components that direct traffic between computers in data centers.

Sending
User Review
0 (0 votes)

RELATED POSTS

Leave a Reply