Broadcom president and CEO Hock Tan told investors mobile network operators are driving demand for the company’s Wi-Fi chips, thanks to multi-billion dollar investments in fibre-to-the-home.
During the company’s fiscal Q3 2021 earnings call (the period ending 1 August), Tan singled out BT, Deutsche Telekom and AT&T as three operators making bigger investments in fibre than Broadcom expected.
“Each of these operators will spend multiple billions of dollars of investment to put that fibre out to the home”, Tan explained, adding fibre goes “hand-in-hand with 5G” and Wi-Fi 6.
Tan noted he expected large fibre investments from Chinese operators, but is now seeing the trend in Europe and the US, creating opportunities for Broadcom as a supplier of supporting technologies like Wi-Fi chips.
“The number of players fighting in this market on technology is much less now given the interesting political events between China and the rest of the world”.
Tan also noted sales of server chips to network operators is “quite hot, and it looks like they are sustaining as opposed to perhaps rolling over”.
Supply chain
Referring to global chip shortages [1], the executive noted Broadcom takes a different approach to some of its competitors by seeking to gauge actual demand instead of shipping as many chips as its customers will take.
“People are building up [a] buffer. There’s a certain level of panic buying”.
“We put in careful discipline to manage supply to where demand is really needed as opposed to where OEMs or even end-users are just building up buffers.”
Broadcom’s sales were lower during the quarter than they otherwise might have been, Tan said explaining in the longer-term he believes it is better to be ready for future demand.
“We need every one of those wafers in this environment, not just this quarter, but next quarter and the quarter after that to ensure that our strategic customers are able to get what they need”.
Broadcom booked revenue of $6.8 billion, up 16 per cent from fiscal Q3 2020, and net income of $1.9 billion, 172.7 per cent higher.
[1] https://www.mobileworldlive.com/devices/news-devices/samsung-warns-of-q2-impact-from-chip-shortage
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