Broadcom looks to defy chip slowdown on data centre, wireless strength

BROADCOM forecast fourth-quarter revenue above estimates on Thursday (Sep 1) 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 per cent to US$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 centres, routers and Wi-Fi modems - an edge over competitors with more exposure to smartphones and PCs.

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

Premium phones sales have so far held steady, however, as higher-income customers remain relatively unscathed. That has helped Broadcom, which counts Apple as a major customer, forecast a 20 per cent 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 forecasts current-quarter revenue of about US$8.9 billion, compared with analysts' estimates of US$8.73 billion, according to Refinitiv data.

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

KEYWORDS IN THIS ARTICLE

READ MORE

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes