AI boom could drive 25% of Broadcom chip sales in 2024

News | June 2, 2023

By Peter Clarke

Artificial intelligence (AI) could be responsible for more than 25 percent of chip sales at Broadcom Inc. in its fiscal 2024 year, according to CEO Hock Tan.

Tan was speaking to financial analysts to discuss the company’s second quarter fiscal year 2023 results.

Broadcom is best known as broad supplier of communications- and networking-related chips and software but Tan highlighted the extreme demand being created by the deployment of generative AI.

“I know you all want to hear how we are benefitting from the strong deployment of generative AI by our customers. Our revenue today from this strong opportunity represents about 15 percent of our semiconductor business,” said Tan. He continued “Having said that it was only 10 percent in fiscal 22 and we believe it could be over 25 percent of semiconductor revenue in fiscal 24.”

Later in the call Tan indicated that about half of the company’s projected growth in fiscal 2024 could come from AI and half from its traditional networking, switching and routing chips.

Profitable and growing

For the 2Q fiscal 23 Broadcom announced a net income of US$3.48 billion on revenue of US$8.73 billion, up 8 percent year-on-year for quarter ended April 30. This was composed of US$6.81 billion in semiconductor sales up 9 percent, and US$1.92 billion in infrastructure software revenue up 3 percent.

“Broadcom’s second quarter results were driven by demand for next generation technologies from hyperscale, while enterprise and service providers continued to sustain,” said Tan, in a statement. “Our third quarter outlook projects year-over-year growth, reflecting continued leadership in networking as we support a measured ramp into large scale AI networks.”

Revenue guidance of approximately $8.85 billion was given for the third quarter of fiscal year 2023, ending July 30, 2023. This will be an increase of about 4.6 percent year-on-year.