【Dongwu Electronics Chen Haijin】Broadcom: AI ASIC growth exceeds expectations, strong growth potential from Scale Up/Out/Across
🥇Event: Broadcom released FY25Q3 performance.
📍The quarter achieved revenue of $16 billion, a 22% year-on-year increase, exceeding analyst expectations of $15.84 billion. Among them, semiconductor solutions revenue was $9.2 billion, a 26% increase, while analysts expected $9.1 billion; AI revenue was $5.2 billion, a 63% increase, and non-AI revenue was $4 billion, remaining flat quarter-on-quarter; infrastructure software revenue was $6.8 billion, a 17% increase. The company’s gross margin was 78.4%. Demand for AI business is strong, with current contract orders reaching $110 billion.
📍The company guides that fourth-quarter revenue is expected to be approximately $17.4 billion, a 24% year-on-year increase, exceeding analyst expectations of $17.05 billion; fourth-quarter AI business revenue is expected to be $6.2 billion, a 66% increase, while non-AI revenue is expected to be $4.6 billion; infrastructure software revenue is expected to be about $6.7 billion, a 15% increase. The expected gross margin for the fourth quarter is 77.7%, a decrease of 0.7 percentage points, mainly affected by the increased revenue share from XPU and wireless business.
🔔1) ASIC: In this quarter, XPU business accounted for 65% of AI revenue, with continued growth in demand for ASIC from three major customers. The company is also collaborating with other potential customers to develop ASICs, and this quarter another potential customer placed a mass production order with Broadcom, bringing in orders worth $10 billion.
🔔2) AI Network: In terms of Scale up, a solution based on open Ethernet technology was launched in collaboration with OpenAI, which supports customers to scale XPU to 512 computing nodes. In terms of Scale out & Sale across, in June this year, the company launched an Ethernet-based 102Tb/s switch, simplifying the network architecture to two levels, thereby reducing latency and significantly lowering power consumption. Additionally, the next-generation Jericho 4 Ethernet structure router was launched, with a bandwidth of 51.2Tb/s, capable of supporting clusters across multiple data centers with over 200,000 computing nodes.
🥇Viewpoint Reaffirmed: CSP continues to promote ASIC business, strong demand for AI inference, optimistic about ASIC and AI network-related segments.
Companies related to the ASIC industry chain:
【AI ASIC】Chipone Technology, Aojie Technology
【Switching Chips】Shengke Communication
【PCB】Shenghong Technology, Huadian Co., Ltd., Shennan Circuit, Shengyi Electronics, Guanghe Technology, etc.
Risk Warning: Supply chain volatility risk, downstream demand may not meet expectations, intensified industry competition.
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