Broadcom CEO Hock Tan sees AI chip revenue 'significantly' above $100 billion next year

Hock Tan, the CEO of Broadcom, has expressed confidence in the growing artificial intelligence sector, forecasting that AI chip revenues will surpass $100 billion next year. During a recent earnings call, Tan highlighted the surge in demand from major clients seeking assistance in creating custom silicon, following the company's stronger-than-anticipated fiscal first-quarter results. In the first quarter alone, Broadcom's AI revenue skyrocketed to $8.4 billion, more than doubling from the previous year, while overall sales rose by 29% to reach $19.3 billion. The company has projected an impressive $10.2 billion in AI semiconductor revenue for the current quarter. Following Tan's optimistic statements, Broadcom's shares experienced a notable increase of over 5% in after-hours trading. Despite facing challenges such as a shortage of high-bandwidth memory essential for custom accelerators and constraints in advanced chip manufacturing, Broadcom continues to thrive by helping clients turn their chip designs into tangible products. The company supports the backend processes before these processors are sent to large fabrication plants, including Taiwan Semiconductor Manufacturing Company. Tan noted that custom AI deployment is entering a new phase, with the company collaborating with six significant customers, including tech giants like Google, Meta, Anthropic, and OpenAI. Google, a pioneer in the in-house chip domain since 2015, has worked closely with Broadcom to develop its tensor processing units and has offered these chips to cloud clients since 2018. Broadcom anticipates robust demand from Google's next-generation chips by 2027. Meta is also exploring the integration of Google's TPUs and is partnered with Broadcom to create its own MTIA accelerator. While some analysts have raised concerns about the future of Meta's custom silicon initiatives, Tan reassured that the MTIA roadmap remains strong. When pressed for details about the sources of the projected revenue, Tan mentioned substantial capacities at various companies, including 3 gigawatts each at Anthropic and Google, with additional contributions from Meta and OpenAI. While revenue per gigawatt may vary, he maintained that his estimates are fairly accurate. In addition to AI accelerators, Broadcom offers a diverse range of products, including digital signal processors and networking switches, reflecting the comprehensive nature of their semiconductor portfolio.