Broadcom Aims to Defy Chip Slowdown on Data Center, Wireless Strength

Broadcom Inc estimated fourth-quarter revenue above projections, citing solid demand from digital industries to help it weather a likely chip industry slowdown.

Shares of the business surged 2.4 percent to $503 in extended trade after third-quarter results also above expectations.

Hock Tan, Chief Executive Officer said in a statement that from their perspective, infrastructure demand remains strong.

Companies are rapidly investing in the infrastructure required to enable a shift to hybrid work modes, giving Broadcom a competitive advantage over competitors with greater exposure to smartphones and PCs.

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

Premium phone sales have been stable thus far, as higher-income clients have remained relatively untouched. This has enabled Broadcom, which counts Apple Inc as a significant customer, to estimate a 20 percent sequential increase 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.”

According to a report, Broadcom expects current-quarter revenue of around $8.9 billion, compared to analyst projections of $8.73 billion.

In the quarter ended July 31, adjusted profit of $9.73 per share on revenue of $8.46 billion exceeded estimates of $9.56 profit on revenue of $8.37 billion.