Broadcom CEO Hock Tan Bullish On AI, Hopeful On VMware Deal

‘I would say at least half the growth is still on our traditional business. The other half may be out of generative AI,’ Broadcom CEO Hock Tan tells investors.

Hock Tan

Broadcom CEO Hock Tan offered no updates about when the pending merger between his company and VMware might be done during an earnings call Thursday where he revealed a winning frame for the chip giant, and continued to talk about generative AI stirring up demand.

Tan said Broadcom sees a massive revenue upside around the demand for generative AI products as it relates to the company’s semiconductor business. Tan said demand has been ramping and by fiscal 2024, products made for AI could account for a quarter of Broadcom’s semiconductor revenue.

“I know you all want to hear about how we are benefiting from this strong deployment of generative AI by our customers,” Tan told investors. “Put this in perspective, our revenue today from this opportunity represents about 15 percent of our semiconductor business. Having said this, it was only 10 percent in fiscal 22. And we believe it could be over 25 percent of semiconductor revenue in fiscal 24.”

[RELATED: Broadcom, VMware May Push Merger Deadline Past Thanksgiving On $61B Deal ]

Broadcom’s revenue for the second quarter 2023 was $8.7 billion, up 8 percent year on year. Net income was $3.4 billion for an earnings per share that came in at $8.15, up $2.22 from a year ago.

Tan said Broadcom sees growth across the rest of its business as well, but he said that it is augmented by demand for AI products as well.

“It’s not entirely all our growth,” he said. “I would say at least half the growth is still on our traditional business. The other half may be out of generative AI.”

Regarding the pending VMware acquisition, which was first announced about a year ago, Tan said the $61 billion deal is still winding through regulators around the world. He said the proposed merger received legal clearances in Australia, Brazil, Canada, and South Africa, and Taiwan. Canadian officials told CRN that while the deal has been approved there, authorities can still contest the merger for up to a year after it closes if the it was found to result in anti-competitive practices.

“We still expect the transaction will close in Broadcom’s fiscal 2023,” Tan said. “The combination of Broadcom and VMware is about enabling enterprises to accelerate innovation and expand choice by addressing their most complex technology challenges in this multi-cloud era. And we are confident that regulators will see this when they conclude their review.”

Last month, Broadcom and VMware opted to push the outside date to August 26. If the deal isn’t closed by then, both sides would push the outside date to November 26, which is after the end of Broadcom’s fiscal year.

Meanwhile regulators in the U.S., the European Union and the UK are each undertaking deep investigations to determine if a merger between Broadcom and VMware would harm competitors or the market.

There are hearing dates in the UK and in the European Union this summer. Both agencies have stated they believe the merger could hurt competition by limiting Broadcom’s competitors access to VMware.

The FTC, which is reviewing the merger in the US, has said it has no comment.