Broadcom sees more chip backlogs amid record revenues of $7.7B

Broadcom CEO Hock Tan announced record revenues for the company’s first fiscal quarter of $7.7 billion but quickly decried a chip backlog that grew by double digits over the prior quarter.

“On the supply front, lead times remain extended and unchanged as inventory of our products in the channel and in our customers’ remains lean,” Tan told investors in an earnings call on Thursday. “Our semiconductor backlog at the close of Q1 continued to grow double digits from that of the prior quarter.”

Semiconductor revenues grew 20% year on year to $5.9 billion and infrastructure software revenue grew 5% year on year to $1.8 billion. There was robust enterprise demand and hypercloud operators are upgrading data  centers while service providers are continuing to deploy next generation fiber to the home. Wireless revenues grew by single digits.

Tan predicted revenues from second quarter server storage connectivity to grow 55% year on year. Overall, second quarter chip revenue is expected to grow by 25% year on year.

The positive first quarter results and a strong second quarter outlook initially sent Broadcom shares higher on Thursday night to $593 with pre-market growth of 3% for Friday.

When asked about supply concerns through 2022, Tan said Broadcom is not offering annual guidance, but responded somewhat cryptically, “we have a line of sight through end of 2022, both, we believe, in demand and supply.”

Tan also conceded that revenues are partly being driven by increases in average selling prices because Broadcom is passing on material cost increases, substrates, and assembly costs to customers. But the increase is “much less that you probably think it is,” he told an analyst.

He also said Broadcom earns 75% of its revenue from just about 100 customers, which gives Broadcom the visibility to know “pretty closely” what those customers need.  When all factors are taken into account, Tan said true growth in demand is about 2%, based on last year’s growth over the prior year.

Broadcom ships 1 billion Wi-Fi 6 and 6E chips

Broadcom also announced Thursday it had shipped 1 billion Wi-Fi 6 and 6E chips over the past year to individuals and enterprises.

Wi-Fi 6 technology is designed to offer six times faster uploads and fours faster downloads as well as seven times better battery life.  It has also led to Wi-Fi 6E adoption, where momentum continues to grow running on 6GHz at a “faster pace than expected,” said Vijay Nagarajan, vice president of wireless connectivity.

He committed to enabling partners with a “full ecosystem” of Wi-Fi 7 chips to power home broad needs. “Wi-Fi 7 will open a whole new world of possibilities, further leveraging the 6 GHz band and meeting the world where it is moving,” he added.

The Wi-Fi milestone from Broadcom prompted another call for regulators globally to ensure full 6 GHz spectrum is available to support Wi-Fi 6E and Wi-Fi 7. “Until the full 6 GHz spectrum is opened up in regions across the world, devices cannot be used to their full potential,” said Tiago Rodrigues, CEO of the Wireless Broadband Alliance, in a statement.

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