(Bloomberg) — Broadcom Inc., one of the world’s largest chipmakers, gave a bullish quarterly sales forecast, helped by demand for components used in corporate computer networks and smartphones.
Revenue in the fourth quarter will be about $7.35 billion, the company said Thursday in a statement. That compares with an average analyst estimate of $7.23 billion, according to data compiled by Bloomberg.Chief Executive Officer Hock Tan has reshaped the chip industry with a series of acquisitions that have made his company one of the largest makers of the crucial electronic components. The reach of its products — from smartphones to powerful computer networking machinery — means the company is a bellwether for demand across the economy.
The results reflected strength in markets such as the “cloud, 5G infrastructure, broadband and wireless,” Tan said in the statement. “We are projecting the momentum to continue in the fourth quarter.”Broadcom’s wireless connectivity chips are used in Apple Inc.’s iPhone 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.
Broadcom’s stock gained less than 1% in extended trading after the report. The shares had increased 12% this year through Thursday’s close.
Like many of its peers, Broadcom relies heavily on outsourced production of its chips, and the U.S. company is one of Taiwan Semiconductor Manufacturing Co.’s largest customers. A surge in demand has caused industrywide shortages of many chips.Tan was one of the first leaders in the industry to point to this crunch and move his customers to long-term, noncancelable orders. The San Jose, California-based company has said that it’s basically sold out for the rest of this year and has assured investors that its noncancellation policy means customers aren’t hoarding inventory, the usual precursor to a collapse in demand.
In the fiscal third quarter, which ended Aug. 1, Broadcom’s profit rose to $6.96 a share, excluding some items. Revenue jumped 16% to $6.78 billion. Analysts had predicted a profit of $6.85 a share on sales of $6.76 billion.
More stories like this are available on bloomberg.com
©2021 Bloomberg L.P.
