Broadcom Inc, one of the world’s largest chipmakers, on Thursday gave a bullish forecast for quarterly sales, boosted by demand for chips used in data centers and equipment needed to improve consumer home internet speeds.
Revenue in the fiscal third quarter will be about US$6.75 billion, the San Jose, California-based company said in a statement.
That compares with an average analyst estimate of US$6.59 billion, data compiled by Bloomberg showed.
A succession of acquisitions by Broadcom chief executive officer Hock Tan (陳福陽) have made Broadcom one of the world’s top semiconductor makers by market value.
He has also added a software division that makes his company’s earnings a broader indicator of trends in corporate spending across the economy.
“Due to the strength in demand for semiconductors across our multiple end markets, we delivered 20 percent year-over-year increase in semiconductor revenue,” Tan said in the statement.
Broadcom’s wireless connectivity chips are used in Apple Inc’s iPhones and other smartphones. Its switch silicon and custom designs are essential parts of data centers owned by cloud computing giants such as Alphabet Inc’s Google and Amazon.com Inc’s AWS.
Broadcom is also a major provider of silicon used in set-top boxes and home-networking gear.
Internet service providers are adding to their network capacity and upgrading the boxes they rent to their subscribers to improve data speeds into the home, while cloud companies are spending to improve the links among their networks of computers, Tan said.
While corporations, more broadly, have yet to accelerate their spending, the positive trends allow Broadcom to give the strong forecast, he said.
Like many of its peers, Broadcom has been swamped with orders from customers amid rising concerns that industrywide shortages will hurt their ability to build new gear.
Tan has said that the company has already sold 90 percent of what it can supply this year by taking orders that he will not allow to be canceled.
Normally, chipmakers have about one-quarter of their supply locked up like this. More than a year ago, Tan was one of the first chip CEOs to warn customers to order well in advance to guarantee supply.
Broadcom and other chipmakers are not shipping enough chips to customers to allow them to hoard inventory.
Broadcom is filling orders in amounts that match what customers need to meet the demand for their electronic products, Tan said.
“It’s a pretty decent reflection of what end-demand is out there,” he told analysts.
“We try to fulfill what customers want in a timely basis. The volume of bookings we receive every week continues to grow,” he said.
In the fiscal second quarter, which ended on May 2, Broadcom’s profit rose to US$1.49 billion, or US$3.30 per share. Revenue jumped 15 percent to US$6.61 billion.
Excluding certain items, profit was US$6.62 per share.
On that basis, analysts had predicted a profit of US$6.44 per share on revenue of US$6.51 billion.
The company’s main chip division, semiconductor solutions, generated US$4.82 billion in sales.
Analysts were looking for US$4.68 billion, data compiled by Bloomberg showed.
Broadcom’s stock was little changed in extended trading after the report. The shares have lagged behind average gains by other semiconductor stocks this year, increasing 6.2 percent, compared with a 12 percent gain by the Philadelphia Stock Exchange Semiconductor Index.
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