Broadcom says AI companies can’t make their own silicon any time soon

Steven

Broadcom says AI companies can’t make their own silicon any time soon

Summary

Broadcom’s Q1 2026 earnings call positioned the company as the dominant supplier of custom AI accelerators to hyperscalers and AI startups. CEO Hock Tan highlighted 106% year-on-year growth in AI-related silicon revenue — $8.4bn for the quarter — and confirmed multi-gigawatt deployments planned for Anthropic, Meta and OpenAI in 2027. Broadcom says it has secured the necessary supplies (including high-bandwidth memory) through 2028 and expects to keep winning major deals because few rivals can match its design, production and packaging scale.

The firm’s AI-focused networking business grew 60% year-on-year, and Broadcom teased a seventh-generation Tomahawk switch chip next year with double the performance of the current part. Broadcom’s overall semiconductor revenue reached $12.5bn (up 53% YoY), while its combined software business — including VMware — produced steady growth, with VMware up 13%.

Key Points

  • Broadcom reported $8.4bn in AI-related silicon revenue for Q1 2026, a 106% YoY increase.
  • The company expects multi-gigawatt deployments of its custom accelerators: Anthropic (1GW soon, 3GW in 2027), OpenAI (over 1GW in 2027), and Meta (multiple GW from 2027).
  • Broadcom claims it has secured supplies (including HBM) to meet demand through 2028 and expects to capture further AI-chip deals.
  • Networking revenue tied to AI rose 60% YoY; Broadcom plans a Gen7 Tomahawk switch that doubles current performance.
  • Overall semiconductor revenue was $12.5bn (up 53% YoY); non-AI chips remained steady at $4.1bn.
  • Software revenue (CA, Symantec Enterprise, VMware combined) was $6.8bn, with VMware growing 13% and Broadcom forecasting continued software growth into Q2.
  • Broadcom predicts line-of-sight to $100bn+ in AI-chip revenue in 2027 and announced a new share buyback that lifted the stock after-hours.

Why should I read this?

Short version: Broadcom’s bragging matters. If you care about who actually builds the guts of large AI systems — and who gets paid for it — this is the memo. Broadcom says rivals can’t scale design, packaging and production quickly enough, so expect the market to tilt towards established silicon suppliers for the next few years. It’s a quick read that saves you sifting through the call transcript.

Context and Relevance

Broadcom’s comments come as many hyperscalers and AI firms debate whether to build in-house accelerators. The company argues that the challenges of attracting silicon design talent, securing component supplies, managing yields at scale and integrating advanced packaging and networking put newcomers at a severe disadvantage. For enterprise and infrastructure planners, this signals that third-party silicon partnerships (and the vendors supplying them) will remain critical to large-scale AI deployments through at least 2028.

For investors and vendors, the numbers underline two trends: (1) AI is driving sharply higher demand for specialised semiconductors and networking gear; (2) software (notably VMware) remains an important, stabilising revenue stream for Broadcom as it expands its hardware footprint.

Author style: Punchy — this write-up picks out the commercial and strategic takeaways you need to know, fast.

Source

Source: https://go.theregister.com/feed/www.theregister.com/2026/03/05/broadcom_q1_2026/