Broadcom shrugged off concerns that customers might rebel against its VMware strategy with first quarter results that showed its top accounts sucking it up.
But what the semiconductor and software vendor really wanted to talk up was its AI chip business, with additional, anonymous, hyperscalers joining its XPU customer roster.
First quarter revenues came in at $14.9bn, up 25% on the year. Net income was $5.5bn, a massive jump on the previous year’s $1.3bn.
In its last set of results, Broadcom emphasised the impact of the VMware acquisition that closed in late 2023, trumpeting its success at driving down costs in the business, and how 4,500 of its largest 10,000 customers had signed up for the VMware Cloud Formation product, “the full software stack virtualizing the entire data center.”
That now stands at around 70% of its top tier, CEO Hock Tan said yesterday. On the broader drive to shift software customers to subscriptions, he said, “As of today, we are over 60% done.” Overall, its software business grew 47% year on year to $6.7bn. But the CA and Symantec businesses didn’t even merit a namecheck.
But Tan’s real focus was on its traditional semiconductor business, particularly its AI silicon. Broadcom refers to its custom AI accelerators as XPUs.
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On a call with analysts, he said, “Growth was driven by AI, as AI revenue of $4.1bn was up 77% year on year. We beat our guidance for AI revenue of $3.8bn due to stronger shipments of networking solutions to hyperscalers on AI.”
He said its hyperscaler partners "continue to invest aggressively in their next-generation frontier models, which do require high-performance accelerators, as well as AI datacentres with larger clusters.”
“We're taping out the industry's first two-nanometer AI XPU packaging 3.5D as we drive toward a 10,000 teraflops XPU. Secondly, we have a view toward scaling clusters of 500,000 accelerators for hyperscale customers.”
Broadcom also planned to enable AI clusters to scale up to one million XPUs on Ethernet. “We have taped out our next generation 100 terabit Tomahawk 6 switch running 200G studies at 1.6 terabit bandwidth. We will be delivering samples to customers within the next few months.”
The firm was “very aligned” with the roadmap of three hyperscale customers, Tan said, and he reaffirmed last quarter’s statement that “we expect these three hyperscale customers will generate a Serviceable Addressable Market or SAM in the range of $60bn to $90bn in fiscal 2027.”
And, he said, it was now working with two more hyperscalers and was on track to tape out their XPUs this year.
He added, “In the process of working with the hyperscalers, it has become very clear that while they are excellent in software, Broadcom is the best in hardware. Working together is what optimizes via large language models.”
