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Broadcom aims to combat chip bottlenecks on data center, wireless strength

Broadcom aims to combat chip bottlenecks on data center, wireless strength

Companies are increasingly investing in the infrastructure needed to support a switch to hybrid work models, giving Broadcom – which makes chips for data centers, routers and Wi-Fi modems – an edge over competitors

Broadcom Inc. forecast fourth-quarter revenue above estimates on Thursday as the semiconductor company expects resilient demand from businesses going digital to help it weather a likely chip industry slowdown.

Shares of the company rose 2.4 percent to $503 in extended trading after third-quarter results also sailed past expectations.

“From our vantage point, infrastructure demand is still very much holding,” chief executive officer Hock Tan told analysts.

Companies are increasingly investing in the infrastructure needed to support a switch to hybrid work models, giving Broadcom—which makes chips for data centers, routers, and Wi-Fi modems—an edge over competitors with more exposure to smartphones and PCs.

Rivals Intel, Advanced Micro Devices, Qualcomm and Nvidia Corp have all issued demand warnings as consumers spend less on PCs, gaming devices, and smartphones in the face of red-hot inflation.

Premium phone sales have so far held steady, however, as higher-income customers remain relatively unscathed. That has helped Broadcom, which counts Apple Inc. as a major customer, forecast a 20% sequential jump in current-quarter wireless revenue.

Still, Broadcom may experience some weakness in demand in the upcoming quarters as enterprise, cloud, and service providers are likely to moderate their orders and capex spending into 2023, said Summit Insights analyst Kinngai Chan.

“Our industry checks are now indicating some early signals of supply outpacing demand.”

Broadcom forecast current-quarter revenue of about $8.9 billion, compared with analysts’ estimates of $8.73 billion, according to Refinitiv data.

Adjusted profit of $9.73 per share on revenue of $8.46 billion in the quarter ended July 31 surpassed expectations of $9.56 profit on revenue of $8.37 billion.

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