Broadcom has revealed the factors fueling its revised revenue forecast, now projected to increase by $1 billion, reaching a total of $51 billion.
Broadcom is expecting 10 percent increase in revenue from chips that help in artificial intelligence (AI) work. This means, Broadcom aims at generating $11 billion in revenue from AI-capable chips in 2024, up from its previous forecast of $10 billion.
Broadcom manufactures networking chips that help move around data used by AI applications such as OpenAI’s ChatGPT or Google’s Gemini.
Broadcom is betting on AI data center customers. As a result, revenue mix has been shifting toward an increasing proportion of networking. Broadcom doubled the number of switches, particularly the Tomahawk 5 and Jericho3. Broadcom deployed these switches in collaboration with partners like Arista Networks, Dell, Juniper, and Supermicro.
Broadcom doubled shipments of PCI Express switches and NICs in the AI back-end fabric. Broadcom is leading the transition of optical interconnects in AI data centers to 800 gigabit bandwidth, which is driving accelerated growth for DSPs, optical lasers, and PIN diodes.
Broadcom is developing the next-generation switches, DSP, and optics that will drive the ecosystem toward 1.6-terabit connectivity to scale out larger AI accelerated clusters.
Broadcom says seven of the largest eight AI clusters in deployment today use Broadcom Ethernet solutions. Next year, Broadcom expects all mega-scaled GPU deployments to be on Ethernet. Broadcom expects networking revenue to grow 40 percent year on year, compared to prior guidance of over 35 percent growth.
Q2 2024
Broadcom’s revenue was $12.5 billion, up 43 percent, in its fiscal Q2 2024.
Broadcom recorded revenue of $3.1 billion from AI products during the second quarter.
Broadcom’s chips unit has attracted orders from cloud providers looking to reduce their dependence on Nvidia’s processors. Broadcom is supplying custom chips for Google and Meta.
Broadcom faced weakness in semiconductor revenue from enterprises and telcos. Broadcom’s wireless revenue was $1.6 billion (up 2 percent), representing 22 percent of semiconductor revenue.
Broadcom’s server storage connectivity revenue was $824 million (down 27 percent), or 11 percent of semiconductor revenue. Broadcom forecast fiscal 2024 server storage revenue to decline around the 20 percent range year on year.
Broadcom’s broadband revenue declined 39 percent to $730 million, representing 10 percent of semiconductor revenue. Broadband revenue remains weak on a continued pause in telco and service provider spending. Broadcom expects 30 percent drop in broadband revenue, with a recovery in 2025.
Revenue from Broadcom’s semiconductor solutions segment, which houses its networking and custom chips, rose about 6 percent to $7.20 billion in the quarter.
Broadcom’s infrastructure software segment revenue was $5.3 billion (up 175 percent) thanks to $2.7 billion revenue contribution from VMware.
Broadcom says the integration of VMware is going well. Broadcom has modernized the product SKUs from over 8,000 disparate SKUs to four core product offerings and simplified the go-to-market flow, eliminating channel conflicts.
Broadcom is transitioning all VMware products to a subscription licensing model. Broadcom signed up close to 3,000 of largest 10,000 customers to enable them to build a self-service virtual private cloud on-prem.
